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.
Some Taxpayers May Want to Unenroll from 2021 Advance CTC
Millions of U.S. households received their first advance payments of the 2021 Child Tax Credit (CTC) in July. While these payments will help many families, some taxpayers may come out better by unenrolling from the advance payment program. If the advance payments add up to more than your total credit for 2021, you may end up owing tax for the year.
In most cases, the IRS bases CTC advance payments on the taxpayer’s 2020 federal tax return, or their 2019 return if their 2020 return has not been processed. Certain life changes during 2021 could reduce your CTC amount, or even make you ineligible for the credit. Therefore, you may wish to consider opting out of advance payments if any of the following occur:
- A qualifying child who lived with you in 2020 (or 2019) will not live with you for more than half of 2021.
- Your income increases significantly in 2021.
- Your filing status changes in 2021.
- You previously met the CTC residency requirement, but will not live in a U.S. state or D.C. for more than half of 2021. In this case, unenrollment may be required.
You can also choose to unenroll from advance payments simply because you want to receive your entire 2021 CTC when you file your tax return in the spring. To unenroll for any reason, use the IRS Advance CTC Update tool (link below). A tax professional can help you determine whether receiving advance payments or opting out makes more sense for your circumstances.
Note that for married couples filing jointly, both spouses must unenroll from advance payments. If only one spouse opts out, the other will still receive monthly advance payments equal to half of the original payment amount calculated for the household.
IRS Advance CTC Portal to unenroll: https://www.irs.gov/credits-deductions/child-tax-credit-update-portal