1. Why did I receive a Form 1098-F from the EEOC?

Section 162(f)(2) of the federal tax code allows employers to deduct “certain amounts paid or incurred for restitution, remediation, or to come into compliance with a law” as part of an agreement with the government. Section 6050X requires the EEOC, as a government entity involved in a suit or agreement described in 162(f), to (1) file an information return with the IRS regarding amounts paid or incurred for restitution, remediation or to come into compliance with a law pursuant to a court order or agreement and (2) furnish a written statement to the payer (i.e., the relevant employer/respondent/defendant).

If you received a document titled “Form 1098-F, Fines, Penalties and Other Amounts” from the EEOC, that means that our records show that this employer was either party to an agreement signed by EEOC or the defendant in a lawsuit brought by the EEOC, and there was a resolution in which the EEOC believes the settlement led or will lead to the employer incurring costs of $50,000 or more.

The fact that the EEOC is providing this form does not mean that a determination has been made that the requirements to claim a deduction under section 162(f) have been met. The determination of whether the requirements have been met for a deduction is made solely by the IRS. The EEOC has no role in that determination.

The 6050X reporting requirement applies to orders and agreements that become binding on or after January 1, 2022. Under the...

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