Greetings!
We hope this finds you and your family well as we approach 2024.
Below, please see our firm update letter along with individual and business tax planning letters which were previously mailed.
Additionally, there are some recent tax developments related to IRS penalty relief, ERC credits and a new LLC/ corporate ownership reporting requirement (Beneficial Ownership Reporting) that you may find relevant and we have outlined below.
As always, please call or email if you have any questions on this information.
We wish you a year full of joy, health and prosperity ahead. Happy New Year!
Francis S. Infurchia & Company, LLC
Recent & Relevant Updates – 2023
IRS offers penalty relief
The IRS announced on December 19, 2023 new penalty relief for approximately 4.7 million individuals, businesses, and tax-exempt organizations that were not sent automated collection reminder notices during the COVID-19 pandemic. The IRS will be automatically waiving approximately $1 billion of failure to pay penalties charged during 2020 and 2021 for taxpayers with assessed tax balances less than $100,000, but will resume charging this penalty in April 2024. Notices and refund checks should begin to appear in January 2024.
Employee Retention Credit (ERC) Updates
Suspension of ERC Processing (September 15, 2023):
The IRS issued a moratorium on the processing of new ERC claims due to a surge in questionable and potentially fraudulent applications. This decision was made to ensure the integrity of the program and to prevent misuse of funds. Taxpayers can still submit claims while the moratorium is in place, but they won’t be processed until 2024 when it is lifted.
Introduction of Withdrawal Process for Unpaid Claims (October 20, 2023):
In response to the previous concerns, the IRS introduced a process allowing taxpayers to withdraw their ERC claims if they hadn’t yet received payment. This step was aimed at those who may have submitted erroneous or doubtful claims, offering them a chance to rectify their submissions without facing immediate penalties. It was part of the IRS’s effort to manage the program more effectively and reduce the burden of processing invalid claims.
ERC Compliance Program and Voluntary Repayment (December 21, 2023):
The most recent development is the establishment of a voluntary compliance program specifically for the ERC. This program targets recipients of ERC funds who may have received payments, which they now believe to be in error because they did not understand the program or were misled by poor advice. The voluntary disclosure program allows repayment of 80% of the ERC received with no interest or penalties if certain criteria are met. The deadline to enter into this program is March 22, 2024.
Please contact our office if you would like more information on these programs.
Link to IRS ERC withdrawal information
Link to IRS Voluntary Repayment Program
Ownership Reporting for all LLCs and corporations
Please read if you own 25% or more of an active business, rental real estate or business investments in LLCs, Corporations, Limited Partnerships, and other state authorized entities.
Effective January 1, 2024, business owners will be required to report and disclose information to the U.S. government about who ultimately owns and controls your business and tax-filing entities. The Corporate Transparency Act requires all entities defined as a reporting company to file information on their “beneficial owners” with the Financial Crimes Enforcement Network (FinCEN), a division of the U.S Department of Treasury. The purpose of this new filing requirement is to create a federal centralized database to crack down on money launderers, terrorists, criminals, and individuals who evade taxes using numerous companies.
Failure to file these disclosure reports can result in significant punitive civil and potentially criminal penalties. We recommend all our clients comply with this new law. As of now, this report need only be filed one time, unless ownership changes occur.
For businesses and entities that are already in existence as of December 31, 2023, the filing of the Beneficial Ownership Information Report (BOI) with FinCEN must be filed by December 31, 2024. Any new entities that are formed starting January 1st, 2024, must file with FinCEN within 90 days of formation, Effective in 2025, the filing requirement for new entities will change to within 30 days of formation.
The US House of Representatives, along with the AICPA and state CPA societies are advocating for a delayed start to this new requirement but as of this email (December 28, 2023) it is still scheduled to begin on January 1, 2024.
While we are happy to alert you to this new reporting requirement, preparing the legal documentation required for this new compliance is outside the scope of what our accounting firm can undertake at this time, so we would be pleased to recommend legal counsel to you.