If you are a business owner, the US government would like to get to know your business.
I wanted to take a moment this morning to make you aware of an upcoming broad sweeping requirement that will most likely begin in 2022. The Corporate Transparency Act (CTA) is a historic new law (1/1/2021 with a delayed start) impacting millions of America's existing small corporations and LLCs and other business entities registered to do business in the United States. The CTA also applies to newly formed entities and requires disclosure of personal ownership information to the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN).
The proposed regulations are still in the comment period, but the comment period ends in February and then Treasury officials will most likely begin to prepare the forms and reporting infrastructure and set the reporting due dates. Willful violations are subject to substantial monetary ($500/day up to $10,000) and criminal penalties, including prison time. Accordingly, you do not want to wait to comply once the reporting process is finalized.
The purpose of the Corporate Transparency Act is to improve U.S. national security by helping to prevent the misuse of corporations and LLCs for money laundering, cyber-crime, fraud, tax evasion, human and drug trafficking, proliferation of weapons of mass destruction and the financing of terrorism. This new legislation marks the first time in history the federal government will maintain a private government database of company ownership for law enforcement purposes.
Items that will need to be reported include:
It is currently proposed to file an initial filing and one upon any changes to the information included in the initial filing.
To prepare for compliance, if any uncertainty exists as to the beneficial ownership of a company you are a part of, immediately start identifying who the owners are and gather the needed information to avoid significant civil and criminal penalties.
Please keep this one on your radar. I will update as more information becomes available.
If you have tried to talk with the IRS lately, you probably weren’t successful.
Last week, the IRS gave an update on its backlog. Normally, the IRS has about 1 million returns that are waiting to be processed when the new tax year begins. Currently, the IRS has about six times that many returns waiting to be processed. On top of that, there are other amended income tax returns and other payroll tax returns and amendments generated to claim Employee Retention Credits in their inbox. Congress also tasked them to manage the advanced child tax credits and continued economic recovery payment (or stimulus) payments which added to their workload. Inbound call volume increased fourfold while the workforce still feels impact of COVID, that resulted in the IRS only able to answer a fraction of the calls.
Refunds have been delayed which has led to the question “Where is my refund?” Your accountant can’t answer that question. Only the IRS can answer that and the IRS has warned that more people will be asking the question as refund processing delays continue. If you can’t talk to them, what should you do?
Thankfully, the IRS has prepared some online and application tools you can use to get an answer. Even if the answer is “Still in Process”, it is better to hear that quickly than after being on hold for three hours on the phone.
The first method is the IRS website, https://www.irs.gov. On the home page is a list of frequently asked topics under the “How can we help you?” Header. Click the “Get your Refund Status” and input some information from your tax return to identify yourself and get your answer. You can also find information about the advanced child tax credit you received and stimulus payments in 2021 that you will need to prepare your 2021 tax returns under other options in that menu.
The second method is to create an IRS account with ID.me (See the “Sign into Your Account” option). You are able get a whole bunch of information about your tax account, including your refund, after you go through the somewhat challenging account setup which includes uploading photo ID and a live selfie in addition to validation using a credit card and credit report. With this account setup, you can also use the IRS2Go app on your cell phone and make tax payments.
The third option is the least preferred, but is to call them. Plan on a long wait if you are lucky enough to not have the system tell you to try again later and hang up on you.
Use should also use direct deposit when claiming a refund as the process is much faster than issuing a check.
While we are all frustrated from the continued impact of the pandemic, may we continue to exercise patience and flexibility as we deal with others – including the IRS.
Once again, the annual tax season is about to begin. The IRS has announced that it will begin accepting returns on January 24th, 2022. The IRS also said that it is still behind on processing millions of prior year returns, refunds and correspondence so we can expect some on-going frustration that we will have a chance to practice patience with.
To help alleviate the stress of tax season, the following suggestions for getting ready for tax time will be beneficial whether you prepare your own tax returns or use a professional.
Look at last year’s return or the organizer your preparer sends out (not all preparers use organizers) to help you refresh your memory about what documents were used last year and might be needed again.
Gather the following documents and put them in one place, whether electronically or paper. These represent your income and deductions. Having them in one place will prevent the dreaded document hunt or help prevent missing something that should be on your return:
This blog allows you to experience the raw, gut wrenching drama of human conflict through accounting in each of its three stages: preparing to do battle, the thrill of victory and the agony of defeat.