Corporate Transparency Act (CTA) goes into effect on January 1, 2024
November 29, 2023
After years of delays, the first stage of the Corporate Transparency Act (CTA) goes into effect on January 1, 2024. It imposes a new federal filing requirement for most corporations and limited liability companies (LLCs).
The CTA’s purpose is to prevent the use of anonymous shell companies for money laundering, tax evasion, and other illegal purposes. But it applies to honest business owners as well as criminals.
The CTA does not apply to all businesses. It applies only to entities such as corporations, multi-member LLCs, single-member LLCs and others formed by filing a document with a state secretary of state or similar official. It doesn’t apply to sole proprietors.
Some businesses are exempt, including:
· large businesses—businesses with more than 20 full-time employees and $5 million in receipts on their prior-year tax return,
· certain businesses already heavily regulated by the government, such as banks and insurance companies,
· nonprofits, and
· several others.
The CTA’s purpose is to compile a massive government database containing the identities and contact information of the “beneficial owners” of most types of business entities. Beneficial owners are the humans who own or exercise substantial control over the entity.
For most reporting companies, identifying the beneficial owners is simple. For example, a three-member LLC in which each member has a one-third ownership interest has three beneficial owners. Identifying beneficial owners for reporting companies with complex ownership structures can be more difficult.
Existing LLC’s and corporations will have time of 12 months from January 1st, 2024, to file the beneficial owner information report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN)—the Treasury Department’s financial intelligence unit. The report must contain the following for each beneficial owner:
· Full legal name
· Date of birth
· Complete current residential street address
· A unique identifying number from a current U.S. passport, state or local ID document, driver’s license, or foreign passport
· An image of the document that contains the unique identifying number.
The beneficial owner information report is filed online at a new federal database called BOSS (an acronym for Beneficial Ownership Secure System). You can’t file until January 1, 2024. You don’t pay any filing fees. The information in the BOSS database is strictly for use by law enforcement, the IRS, and other government agencies. FinCEN does not disclose the BOSS information to the public.
Please be aware there are substantial penalties imposed under Act for failure to file or comply with requirements of the Act.
FinCEN has already been notified of fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled "Important Compliance Notice" and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages or click on any links or scan any QR codes within them.
If you want our assistance with your required reporting and the necessary filings, please call us at 615-444-1149. Please note that as is our policy, we will not automatically file a report on your behalf without your request and authorization.
Quarterly Returns are due to be mailed today!!
If you have not picked yours up- please do so asap..
IRS Extends Tax Deadline for Victims of Tornadoes & Severe Storms in Tennessee
Counties affected: Cannon, Hardeman, Hardin, Haywood, Lewis, Macon, McNairy, Rutherford, Tipton and Wayne.
Taxpayers who choose to take advantage of this extended deadline could receive a letter from the IRS stating that their return is late or that a penalty has been assessed. The taxpayer should then call the IRS at 866-562-5227 or the number on the notice.
IR-2023-75, April 10, 2023
WASHINGTON — Tennessee storm victims now have until July 31, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced today.
The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as a result of tornadoes, severe storms and straight-line winds that occurred starting on March 31. This means that individuals and households that reside or have a business in Cannon, Hardeman, Hardin, Haywood, Lewis, Macon, McNairy, Rutherford, Tipton and Wayne counties qualify for tax relief. Other areas added later to the disaster area will also qualify for the same relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.
The tax relief postpones various tax filing and payment deadlines that occurred starting on March 31, 2023. As a result, affected individuals and businesses will have until July 31, 2023, to file returns and pay any taxes that were originally due during this period.
This includes 2022 individual income tax returns and various business returns due on April 18. Among other things, this means that eligible taxpayers will have until July 31 to make 2022 contributions to their IRAs and health savings accounts.
The July 31 deadline also applies to the quarterly estimated tax payments, normally due on April 18 and June 15.
The July 31 deadline also applies to the quarterly payroll and excise tax returns normally due on April 30, 2023. In addition, penalties on payroll and excise tax deposits due on or after March 31 and before April 18, will be abated as long as the tax deposits are made by April 18, 2023.
The Disaster Assistance and Emergency Relief for Individuals and Businesses page has details on other returns, payments and tax-related actions qualifying for the additional time.
Some affected taxpayers may find that they need more time to file beyond the July 31 deadline. If so, the IRS urges them to request the additional time, electronically, before the original April 18 deadline. Two free and easy ways to do this are through either IRS Free File or IRS Direct Pay, both available only on IRS.gov. Visit IRS.gov/extensions for details.
After April 18 and before July 31, disaster area taxpayers can file their extension requests only on paper.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.
In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed in early 2024), or the return for the prior year (that is, the 2022 return normally filed in 2023). Be sure to write the FEMA declaration number – 4701-DR − on any return claiming a loss. See Publication 547 for details.
The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.gov.
Deducting Business Meal & Entertainment Expenses
Before the Tax Cuts and Jobs Act (TCJA) went into effect, you could deduct 50% of the cost of most business entertainment. This treatment aligned with the rules for deducting 50% of the cost of business meals.
For 2018 and beyond, the TCJA permanently eliminated deductions for most business-related entertainment expenses. That means businesses could no longer deduct anything for expenses, including taking customers golfing or treating them to a night at the opera. But they could still deduct 50% of the costs of business-related meals under the TCJA.
IRS Regulations
For a couple years after the TCJA was signed into law, the impact of the general disallowance of write-offs for entertainment expenses on the deductibility of business-related meals was unclear. The IRS finally issued regulations in 2020 to clarify matters. Here are key components of that guidance.
Definition of "food and beverage costs." This term refers to all food and beverage items, regardless of whether they're characterized as meals, snacks or after-dinner cocktails. It means the full cost of such items — including any sales tax, delivery fees and tips.
Meals vs. entertainment. For purposes of the general disallowance of deductions for entertainment expenses, the term "entertainment" doesn't include food and beverages unless:
The food and beverages are provided in conjunction with an entertainment activity (for example, hotdogs and beers at a basketball game), and
The food and beverage costs aren't separately stated.
To be 50% deductible in 2023 and beyond, food and beverages consumed in conjunction with an entertainment activity must either be:
Purchased separately from the entertainment, or
Separately stated on a bill, invoice or receipt that reflects the usual selling price for the food and beverages if they were purchased separately from the entertainment or the approximate reasonable value of the food and beverages if they weren't purchased separately.
That means you'll need to obtain detailed receipts from entertainment venues if you want to deduct these costs.
50% deduction for business meals. The regs allow businesses to deduct 50% of the cost of business-related meals, as was the case before the TCJA. However, no deduction is allowed for business meals unless the following three conditions are met:
The expense isn't lavish or extravagant under the circumstances,
The taxpayer (or an employee of the taxpayer) is present at the furnishing of the food and beverages, and
The food and beverages are provided to the taxpayer or a business associate.
The term "business associate" means a person with whom you reasonably expect to deal with in the conduct of your business. Examples include an established or prospective:
Customer,
Client,
Supplier,
Employee,
Agent,
Partner, or
Professional advisor.
The regs also clarify that you can deduct 50% of the cost of a business-related meal for yourself — for example, if you're stuck somewhere working late at night.
Important: Under temporary relief provided during the pandemic, businesses were allowed to deduct 100% of the cost of business-related meals that were provided by a restaurant in 2021 or 2022. That provision expired at the end of 2022.
Meals while traveling. The general rule is that 50% of the cost of meals while traveling on business can still be deducted. The longstanding rules for substantiating meal expenses still apply. Hold on to your receipts!
The regs also reiterate the longstanding rule that no deductions are allowed for meal expenses incurred for spouses, dependents or other individuals who accompany the taxpayer on business travel (or accompany an officer or employee of the taxpayer on business travel), unless the expenses would otherwise be deductible by the spouse, dependent or other individual. For example, meal expenses for your spouse are deductible if he or she works in your business and accompanies you on a business trip for legitimate business reasons.
Favorable Exceptions
Before the TCJA, the following favorable tax-law exceptions allowed 100% deductibility for eligible meal and entertainment expenses. A little-known fact is that the regulators confirm that these exceptions still apply in the post-TCJA world. So, your business can deduct 100% of:
Meal and entertainment expenses that are reported as taxable compensation to recipient employees.
Food, beverage and entertainment expenses incurred for recreational, social or similar activities that are incurred primarily for the benefit of employees other than certain highly compensated employees. For example, you can deduct the costs of food, beverages and entertainment at company picnics or company holiday parties that can be attended by all employees.
The cost of food, beverages and entertainment made available to the general public. For example, a retailer can deduct free snacks that are available to shoppers.
The cost of food, beverages and entertainment sold to customers for full value, including the cost of related facilities. Also, a restaurant or catering business can deduct 100% of the cost of food and beverage items that are purchased in connection with preparing and providing meals to paying customers and that are consumed at the worksite by employees who work in the restaurant or catering business.
The cost of meals and entertainment that are reported as taxable income to a nonemployee recipient on a Form 1099. For example, it's fully deductible to award a potential customer at a sales presentation a dinner cruise for 10 valued at $800, if the recipient is issued a Form 1099.
Mixed Bag
Under current law, businesses generally can't deduct entertainment expenses paid or incurred after 2017 and business meals are only 50% deductible in most situations. But some taxpayer-friendly exceptions apply. Contact your tax advisor to make sure your company's policies and procedures comply with the IRS rules and recordkeeping requirements.
2022 Tax Information
Information for the 2022 Tax Season:
All Clients must complete a 2022 Individual Tax Information Packet to ensure all information is updated.
Please bring all information at one time. Bringing additional information after you have informed us that your return is ready to be competed will result in additional fees if your return must be revised.
If you want an extension filed, contact our office preferably by email so we can add you to that list.
A list of needed information can be viewed here. (Click on Individual Federal and State Taxes)
We will make every effort to file returns by the due dates. In the event we are unable to we will file for extensions and complete the return as quickly as possible.
2022 Tax Information
Information for the 2022 Tax Season:
All Clients must complete a 2022 Individual Tax Information Packet to ensure all information is updated.
Please bring all information at one time. Bringing additional information after you have informed us that your return is ready to be competed will result in additional fees if your return must be revised.
If you want an extension filed, contact our office preferably by email so we can add you to that list.
A list of needed information can be viewed here. (Click on Individual Federal and State Taxes)
We will make every effort to file returns by the due dates. In the event we are unable to we will file for extensions and complete the return as quickly as possible.
As we close 2022......
Happy Holidays from all of us here at Royce A. Belcher, CPA.
We appreciate you and your continued patronage and wish you and your family a happy, safe and prosperous 2023.
A couple of important dates for the upcoming Tax Season are Cutoff dates for tax information to be in our office:
Business Returns (sole proprietorship, partnership, corporation, and S corporation.)-February 25, 2023
Individual- March 25, 2023
Extension Deadline
To our valued clients that have requested we file an extension of time for your 2021 tax filings, please be aware the deadline to complete your returns is quickly approaching. In order for us to complete your returns in a timely manner, we must have all of your tax information into our office by:
Individuals – Information must be received on or before Saturday, September 10, 2022.
Please be sure to complete updated tax information worksheets herein attached for our office as this provides detailed, valuable information needed to complete your return. Please also remember for 2021, you must provide the accurate amounts of your 3rd stimulus payment and child tax credit received. If these amounts are incorrect, the processing of your refund or any balance due the IRS may be changed and delayed as the return will be required to be reviewed and adjusted manually by an IRS employee. And the answer is “No, we do not have access to the amount you received for these payments.” You can find it on the IRS website, irs.gov.
IRS announces tax relief for Tennessee severe storms, straight -line winds and tornadoes
Individuals and households affected by severe storms, straight-line winds and tornadoes that reside or have a business in Cheatham, Davidson, Decatur, Dickson, Dyer, Gibson, Henderson, Henry, Lake, Obion, Stewart, Sumner, Weakley and Wilson counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after December 10, 2021 and before May 16, 2022 are postponed through may 16, 2022.
If an affected tax payer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.
For information on services currently available, visit the IRS operations and services page at IRS.gov/coronavirus,
The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5277 to request this tax relief.
To read the entire announcement click HERE