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November 25 2017

Tax Reform Takes On New Momentum as Year-end Approaches

News Letters, Tax Help, Tax Law

Tax reform discussions continue on Capitol Hill with legislation expected to be released very soon. GOP lawmakers in the House and Senate appear to be aiming for a comprehensive overhaul of the Tax Code. President Trump and Republicans in Congress have set out an ambitious schedule of passing a tax reform bill before year-end.

Tax reform

Although the specifics are not yet known, a GOP tax bill is expected to lower the individual and corporate tax rates and eliminate many tax credits and deductions. The corporate tax rate could be lowered to 20 percent (or in the 20s), the individual tax rates are expected to cap at 35 percent (although a higher rate may be retained), and the list of eliminated credits and deductions is likely to be lengthy. There is also talk of a lower rate for pass-through businesses.

The current Tax Code contains hundreds of credits and deductions, targeted to individuals, businesses and taxpayers of all types. These tax preferences touch on almost every activity. In past years, proposals to repeal tax preferences have met stiff resistance from the taxpayers they benefit.

The Trump Administration and Republicans in Congress appear to support keeping the home mortgage deduction and the charitable contribution deduction for individuals. The research credit is one business incentive that also appears to have support from the White House. Almost every other tax preference could be a candidate for repeal.

The GOP tax bill could also repeal the alternative minimum tax (AMT) and the federal estate tax. The federal gift tax, however, does not appear to be on the chopping block.

Without bill language, it is nearly impossible to envision the components of a GOP tax bill. Left unanswered, at least for now, are some important questions. Will the GOP tax bill be retroactive to January 1, 2017? Will the GOP tax bill expire after 10 years, as some tax bills have in the past? Our office will monitor developments and keep you posted.

Filing season

At this time, it is unclear if any tax law changes would be retroactive to January 1, 2017. If they are, the IRS may have to delay the start of the 2018 filing season. The filing season typically starts in mid-January. The IRS programs its return processing systems for existing tax laws. If the tax laws change, the IRS needs to revise its processing systems and that takes time. Our office will keep you posted.

More tax legislation

While the details of a GOP tax bill take shape, some stand-alone tax bills have been introduced in Congress. They include bills that:

  • Exempt more taxpayers from the Affordable Care Act’s individual shared responsibility requirement
  • Permit non-itemizers to take above-the-line deductions for charitable contributions.
  • Delay the Affordable Care Act’s health insurance provider fee.
  • Make taxpayers in Puerto Rico eligible for the earned income tax credit (EITC).
  • Create a tax credit for renewable chemicals.
  • Treat Native American nations the same as states for certain federal tax purposes.
  • Create “Move America” bonds for infrastructure improvements.
  • Expand tax-free distributions from IRAs for charitable purposes.

Lawmakers have a short window between now and year-end to pass any tax bills. Please contact our office if you have any questions about tax legislation.

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FinCEN

Federal Beneficial Ownership Reporting

 

FinCEN is now Requiring Beneficial Ownership Information (BOI) to be reported through their BOI E-Filing System.

 

Do I Need to Report?

Most businesses are small businesses that may need to file. Your company may need to report information about its beneficial owners if it is:

  • A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
  • A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing with a secretary of state.

There are 23 types of entities that are exempt from the beneficial ownership information reporting requirements. FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption.

When Do I Report?

Reports began being accepted on January 1, 2024.

  • If your company was created or registered before January 1, 2024, you will have until January 1, 2025, to report BOI.
  • If your company is created or registered on or after January 1, 2024, you must report BOI within 90 days of notice of creation or registration. Beginning in 2025, that reporting window is 30 days.
  • Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.

What information do I need to report?

All Companies who are subject to BOI filing, must report the name, address ID number, phone number, business ownership, and more…..for each of the following persons.

·         Any individual who either directly or indirectly exercises substantial control over the reporting company

·         Any individual who owns or controls at least 25% of the reporting company’s ownership and/or management interests

·         The individual who registered the reporting company with their Secretary of State

What Penalties could my business face?

·         A person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues.

·         That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000.

·         Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.

How can Deanna Ramsey CPA LLC help?

·         This is a new requirement that will affect most businesses operating in the United States.  The process is detailed and must be completed accurately!

·         We already know how to file this report online and are happy to assist with the process.

For more information, visit FinCEN’s website, view FinCEN’s Frequently Asked Questions (FAQs), or contact FinCEN.