Dogra CPA LLC

Tax Alert: Fifth Circuit Appeals Court Reinstates BOI Reporting Requirement for Small Businesses

December 23, 2024 — In a landmark ruling, the Fifth Circuit Court of Appeals has reinstated the Beneficial Ownership Information (BOI) reporting requirement for small businesses, reversing a previous decision that had suspended the rule.

The BOI reporting requirement, part of the Corporate Transparency Act (CTA), mandates that small businesses disclose the identities of their beneficial owners—the individuals who ultimately control or benefit from a company.

What the Ruling Means for Small Businesses?

The decision impacts a wide range of small businesses across the country, particularly those with fewer than 20 employees or less than $5 million in gross receipts. These entities will now be required to disclose their beneficial owners to FinCEN by January 13, 2025, unless they fall under an exemption.

Companies that fail to comply with the BOI reporting requirement may face penalties, including substantial fines.

Key Takeaways:
• The Fifth Circuit reinstated the BOI reporting requirement for small businesses under the Corporate Transparency Act.
• Small businesses must disclose their beneficial owners to FinCEN by January 13, 2025.
• Non-compliance could lead to significant penalties.
• Supporters of the rule argue it will improve transparency and reduce financial crimes

Tax Alert: 2021 YEAR-END TAX PLANNING FOR BUSINESSES

As we start to wrap up 2021, now is the time to take a closer look at your current tax strategies to make sure they are still meeting your business needs and take any last-minute steps that could save you money.

Here’s a look at some issues to consider as we approach year-end:

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2021 YEAR-END TAX PLANNING FOR BUSINESSES - DOGRA CPA LLC Now is the time to take a closer look at your current tax strategies to make sure they are still meeting your needs and take any last-minute steps that could save you money.

Tax Alert: 2020 Year-End Tax Planning for Businesses

We can all agree that 2020 is unlike any other year. As we consider tax-planning strategies for the year end, major uncertainty continues concerning the severity of the pandemic and length of the economic recovery. Although Congress passed two major pieces of legislation in response to the health and economic impact of the coronavirus pandemic, it remains unclear if additional relief is forthcoming.

As such, each business should consider the unique challenges and possible opportunities that this year presents. Let’s find out what they are.

See More: https://bit.ly/3fM8xmK

𝐈𝐑𝐒 𝐂𝐨𝐧𝐟𝐢𝐫𝐦𝐬 𝐏𝐏𝐏 𝐋𝐨𝐚𝐧 𝐅𝐨𝐫𝐠𝐢𝐯𝐞𝐧𝐞𝐬𝐬 𝐢𝐬 𝐓𝐚𝐱𝐚𝐛𝐥𝐞 𝐢𝐧 𝟐𝟎𝟐𝟎

Earlier this year, the IRS issued Notice 2020-32 which stated that expenses funded with a Paycheck Protection Program (PPP) loan that is forgiven are not deductible for tax purposes under rules designed to prevent a double tax benefit. A much-debated question since the issuance of that notice is whether a taxpayer that received a PPP loan and paid otherwise deductible expenses can deduct those expenses in the tax year in which the expenses were paid or incurred if, at the end of that tax year, the taxpayer has not received a determination of forgiveness of the loan or not yet applied for forgiveness.

On November 18, the IRS issued Rev. Rul. 2020-27 answering that question: A taxpayer that receives a PPP loan and paid or incurred otherwise deductible expenses related to that loan may not deduct those expenses in the tax year those expenses were paid or incurred if, at the end of that tax year, the taxpayer reasonably expects to receive forgiveness of the PPP loan, even if the taxpayer has not submitted an application for forgiveness of the loan by the end of such tax year.

The IRS presented two scenarios in the revenue ruling as examples. In both scenarios, the borrower pays expenses such as payroll and mortgage interest that would qualify under the CARES Act as eligible PPP expenditures and the borrower satisfies all of the requirements for the loan to be forgiven. In the first scenario, the borrower applies for forgiveness in November 2020 but has not received notice of forgiveness by year-end. In the second scenario, the borrower does not plan to apply for forgiveness until 2021. In both cases, the IRS explained that the taxpayers could not deduct expenses funded with the PPP loans because there was a reasonable expectation of forgiveness.

The IRS also released Rev. Proc. 2020-51 to provide a safe harbor rule for PPP loan borrowers where the forgiveness has been denied in full or in part. In such case, the taxpayer would be permitted (pursuant to the provisions in the Rev. Proc.) to take a tax deduction for those otherwise eligible expenses on an original return, an amended return, or an administrative adjustment request.

Rev. Rul. 2020-27 provides much-needed guidance to taxpayers that were considering delaying the filing of forgiveness applications in order to secure deductions in a current-year tax return or taxpayers that had filed a forgiveness application but were uncertain about how to file their tax returns.

Note: The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.