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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.

Watch out for Non-deductible Wellness Expenses Scams

The IRS recently issued a reminder that personal expenses for general health and wellness usually do not qualify as medical expenses for tax purposes. These costs are generally not eligible for reimbursement through a health flexible spending arrangement (FSA), health savings account (HSA), medical savings account (MSA) or health reimbursement account (HRA). General wellness purchases also typically cannot be claimed as itemized tax deductions.

Examples of non-deductible, non-reimbursable health and wellness purchases include healthy foods for weight or blood sugar management. Dishonest companies aggressively market food and wellness products, claiming that these items become eligible for FSA/HSA/MSA/HRA reimbursement when the seller provides a doctor’s note to the buyer.

In reality, a doctor’s note generally does not change an ineligible expense into an eligible one. Requests for FSA reimbursement based on these bogus marketing claims typically get denied, and may jeopardize the tax advantages of FSAs and similar plans.

Under IRS rules, a health expense only qualifies for reimbursement if it directly relates to “a targeted, diagnosis-specific activity or treatment.” In other words, the expense must be part of a treatment plan created by a medical professional to address a diagnosed illness or medical condition. If you are unsure whether a particular health expense qualifies for reimbursement, check with your workplace benefits plan administrator before making the purchase.