Unfortunately, these are not deductable expenses on the tax return.
there are only four kinds of deductable taxes on the individual tax return:
There are four types of deductible nonbusiness taxes:
Restitution is not a tax. Resitution is income that is taxed. There are only 4 states who current tax restitution payments.
If you are the perp, then they call it a tax because they take money from your income and pay it to a state restitution fund.
So what are you trying to say? You asked if it was tax deductable and I said that it was not.
You found this nifty peice of legislation which I knew about. But since it has not become law, it can not be used to justify a tax deduction. I do not give a lot of legislative reference as most customers are not able to handle the information, and then we get into long philosophical discussions which do not really answer a question.
You seem to be better than most.
Until the legislation become law, the tax still exists. As I previously said, only four states currently administer this tax.
The guidance from the tax advisory committee is actually for a person to negotiate where possible for getting any fines and penalties charachterizes as restitution to a particular individual; this is because legislation aside, the courts will uphold a claim for deductability on that premise only. for now we only have four states to contend with, as the others have followed former supreme court decision in shaping these laws.
This does not negate my original answer. For now, there are only those four taxes, taken from an exact quote on the IRS website, that are deductable taxes.
The IRS regulation is what drives the answers in TAX because we can not recommend a diviation form the law as written and codified.
If I recommend that you file a law suit to claim the deduction, and then you lose, then I am implicated for steering you in the wrong direction; for legal reasons, I can only adhere to the letter of the law.
The fed, that is the IRS and U.S.Treasurey, only allow those four categories of tax to be deducted on a personal return...until such time as the law changes.
I apologize deeply. We get a lot of tax protestors and i thougth that was the vein that was coming at me . I truly am sorry.
The courts seem to rule in favor of people who have restitution when it is charachteriszed as to a particular invididual. If he can get it recharachterized, for 15 million, it seems to be worth the litigation. But, he has to get it recharacherized from the courts.
Court case against deductions: http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=6th&navby=case&no=960016p
Cases for deductability...note they are designated as compensatory to an individual person or organization: The courts ruled in the following cases that penalties designated as liquidated damages were deductible if they were compensatory or remedial in nature, not primitive (Middle Atlantic Distributors, 72 TC 1136 (1979); The Mason and Dixon Lines, Inc., 708 F2d 1043 (1983); Larry. D. Huff, 80 TC 804 (1983); and H.A. True, Inc., 603 FSupp 1370 (1985)). The Service also ruled, in Rev. Ruls. 69-581, 80334 and 88-46, that penalties that are remedial, rather than punitive, are deductible.
In John 77 Stephens, 905 F2d 667 (1990), the Second Circuit ruled that a taxpayer could claim a deductible loss for the return of embezzled funds to a corporation, because the restitution was to a private party and was a civil remedy ordered primarily to reimburse tire corporation's loss. Finally, in Talley Industries, Inc., 18 Fed Appx 661 (9th Cir. 2001), the Ninth Circuit ruled that a government contractor who pled guilty to a charge of false and fraudulent statements could deduct the portion of the settlement payment that represented compensation of the government's actual loss. However, the balance of the payment could not be deducted, because the parties did not show they intended it to compensate for loss.
It is clearly not deductable by the code, but: if he wants to get it into court, he might try, and then again, he might litigate for it or get an amended or modified court order allowing it. But, that is more legal than tax.
Again, I apologize if I appeared a bit testy. It just had the look and feel of somthing else. It is hard to convey meaning in this venue.