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 Suspends Sending Notices Due to Return Processing Delays
As a result of pandemic-related issues, the IRS has a backlog of millions of original and amended 2020 and 2019 tax returns awaiting processing. This situation creates a risk that taxpayers who have met their tax filing and payment obligations could receive automated IRS notices about unfiled returns or balances owed. To prevent confusion and undue taxpayer stress, the IRS has temporarily halted sending certain letters and notices.
- The suspended notices and letters include:
- Notices related to unfiled or delinquent individual tax returns (especially IRS Letters CP80, CP59, CP759, CP516, CP616, CP518 and CP618)
- Tax balance due letters to individual taxpayers (CP501, CP503, CP504)
- Notices to individual taxpayers regarding insufficient tax withholding from paychecks
- Delinquent business tax return notices (CP259, CP959, CP518, CP618)
Although the IRS will not send out these documents while clearing the backlog, penalties and interest charges may still accrue on unpaid tax balances. Therefore, if you have yet to file your 2020 return or owe past tax, you should pay as much of the tax due as possible as soon as you can. Your tax professional can help you determine how much to pay, and also help you file any overdue returns.