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BREAKING NEWS – Corporate Transparency Act on Hold

as of Monday, March 3, 2024

On Friday March 1, 2024, the U.S. District Court for the District of Alabama declared the Corporate Transparency Act (CTA) unconstitutional. In the case of National Small Business Association v. Yellen (Case No. 5:22-cv-01448) [1], initiated by the National Small Business United, the challenge was against the CTA’s mandate for small businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).

The ruling has the effect of suspending all BOI filing requirements for now, all enforcement actions, and all compliance concerns including questions of “practicing law without a license.” Experts believe the ruling will be appealed, probably to the Supreme Court, so this is a temporary filing requirement suspension until a final appeal is exhausted. Voluntary filing appears to still be allowed if for some reason a client desires to file.

If You Receive an IRS Letter

If the IRS needs to contact a taxpayer, the agency will generally send a letter in the mail rather than emailing or calling. Taxpayers may receive IRS letters for many reasons, including:

  • The taxpayer owes tax and did not pay it with their return or set up a payment plan.
  • The IRS has a question about a tax return or needs more information to process it.
  • The IRS has made an adjustment to a tax return or refund amount.
  • The IRS needs to verify a taxpayer’s identity.

If you receive an IRS letter in the mail, do not ignore it, but also do not panic. Some IRS notices do not require the taxpayer to take any action, while others advise the taxpayer of an issue that can be readily resolved. Calmly open the letter and read it carefully and thoroughly.

In many cases, you will not need to respond to the letter. For example, if an IRS notice simply informs you of a minor change made to your return or your refund amount, you can just file it with your tax records for future reference.

However, if the letter asks you to provide the IRS with additional information, you should respond as quickly as possible. Pay special attention to whether the notice includes a deadline to respond. Taxpayers who fail to reply to an IRS letter by a specified deadline may face penalties or forfeit their appeal rights.

If you owe tax, pay the amount due as soon as possible to minimize penalties and interest charges. If you cannot pay the full amount due, you may apply online to set up a payment plan to avoid receiving additional letters and potentially incurring escalating penalties.

Remember, you have the right to appeal any IRS decision about your tax return or the amount of tax you owe.