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.
IRS Announces Penalty Relief for Millions with Overdue Tax Balances from 2020-2021
During the COVID-19 pandemic, the IRS temporarily halted sending tax due notices to millions of individuals, businesses and organizations. However, penalties for non-payment or late payment continued to accrue on many overdue tax balances. To address this issue, the IRS has announced automatic penalty relief for nearly 5 million taxpayers with overdue taxes from tax year 2020 and/or 2021.
Affected taxpayers do not need to take any action to qualify for this penalty relief, but they should watch their mail for an IRS notice detailing overdue taxes. The penalty waiver will remain in effect only through March 31, 2024, so taxpayers should pay the overdue amount by that date if at all possible. Those who cannot pay the full amount they owe can still reduce future penalties by paying as much of the balance as possible by the March 31 deadline.
This penalty relief program also extends to taxpayers who already paid their overdue 2020 and/or 2021 tax. In most cases, if the balance they paid included penalties now covered by the waiver, they will receive an IRS refund in 2024.
Note that this special penalty waiver applies only for taxpayers with unpaid tax balances of less than $100,000 per tax return. Those who owe a greater amount of overdue tax from 2020-2021 will not receive automatic penalty relief, but may still be able to apply for penalty reductions under existing IRS programs.
Instead of waiting for a mailed notice, taxpayers with online IRS accounts may check those accounts to find their updated balances after the penalty waiver. The IRS has completed these account updates for individual taxpayers, and expects to complete them for businesses by mid-January. Trusts, estates and tax-exempt organizations may not see their online account balances updated until early March.