Monthly Archives: October 2024

On March 5, 2024 we posted Federal Court Rules Corporate Transparency Act Unconstitutional - Do You Still Need to File BOI?  where we discussed that in National Small Business United v. Janet Yellen, a Northern District of Alabama Federal Judge ruled on March 1, 2024, that the CTA was unconstitutional. Citing privacy concerns, and a myriad of legal reasoning and precedent around the scope of Congress’s power.

Now during the week of Sept 23rd challengers of the Corporate Transparency Act's beneficial ownership information reporting requirements argued their position in the first case to reach a federal appellate court, however, it was unclear whether the 11th Circuit panel was receptive. (National Small Business United (NSBU) v. Yellen (No. 24-10736).)

NSBU, however, is not challenging the Corporate Transparency Act as applied in a particular circumstance, but rather has said the law "has no constitutional applications." Prevailing on a facial challenge requires clearing a "very high bar," the government has argued in its briefing and NSBU has failed to do so, said the government, because of the "many valid applications" of the statute as to "companies engaged in interstate commercial activity at the time they file reports."

NSBU has argued that facial challenges should be evaluated under a different standard when enumerated powers are at issue. "If Congress lacks constitutional power to enact a federal statute, then that statute is facially invalid and has no constitutional applications," it said in briefing.

The Treasury Department's Financial Crimes Enforcement Network made its interpretation of the ruling clear in a statement issued by FinCEN stated that the ruling applies (ONLY) to the plaintiffs in NSBU.

Choosing to file means potentially losing a filing fee and any cost incurred for taxpayers who decide to use an advisor. However, filing provides peace of mind, staying in CTA compliance means there's no chance of facing more stringent financial and criminal penalties for failure to file.

Need Help Filing Your BOI Report?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

The Internal Revenue Service released the tax gap projections for tax year 2022, a detailed analysis showing the nation’s projected gross tax gap at $696 billion. This reflects the difference between projected ‘true’ tax liability and the amount of tax that is actually paid on time. 

The new tax gap projections reflect an increase over the tax year 2014-2016 estimates and the tax year 2017-2019 projections. The 2022 projection is an increase of $200 billion over tax years 2014-2016. 

However, the IRS noted the increase for 2022 is similar to the 41 percent increase in the economy since the 2014-2016 time period as measured by the Gross Domestic Product. With the new study also showing the voluntary compliance rate among taxpayers remaining steady at 85%, the IRS noted the tax gap increase ultimately reflects growth in the economy and changes in the sources of income – not a change in taxpayer behavior involving filing or paying their taxes. 

In addition, the new tax gap projections reflect the time period before the IRS began increasing tax compliance work following passage of the Inflation Reduction Act (IRA) in August of 2022. Since then, the IRS has stepped up compliance activity in a variety of areas with the additional funding, including the agency collecting an initial $1.3 billion from high-income non-filers following IRA funding. 

“This is a critical study about the nation’s tax system, and the results underscore there remains a sizable tax gap between taxes that are legally owed but aren’t actually being paid,” said IRS Commissioner Danny Werfel. “

While the bottom line for the new tax gap numbers shows the increase basically reflects growth in the larger economy, the size of the gap also vividly illustrates the ongoing need for adequate funding for the IRS. 

We need to focus both on compliance efforts to enforce existing laws as well as improving service to help taxpayers with their tax obligations to help address the tax gap. The new projections are published in Tax Gap Projections for Tax Years 2021 and 2022 (IRS Publication 5869).  

Gross tax gap

The projected $696 billion gross tax gap is the difference between projected ‘true’ tax liability for a given period and the amount of tax that is paid on time. The gross tax gap covers three key areas – non-filing of taxes, underreporting of taxes and underpayment of taxes. 

• Non-filing, which means tax not paid on time by those who do not file on time:
• $63 billion in tax year 2022, representing 9% of the gross tax gap.
• Underreporting, which reflects tax understated on timely filed returns.
• $539 billion in tax year 2022, representing 77% of the gross tax gap.
• Underpayment, or tax that was reported on time, but not paid on time.
•  $94 billion in tax year 2022, representing 14% of the gross tax gap. 

The tax year 2021 and 2022 tax gap projections translate to about 85% of taxes paid voluntarily and on time, which is consistent with recent levels. The projections are based largely upon the compliance behavior estimated from the most recent set of completed audits (from tax years 2014-2016). 

After IRS compliance efforts and other late payments are factored in, the projected share of taxes eventually paid is 86.9% for tax year 2022, down slightly from the 87% for tax years 2014-2016. 

Is Consistently Shows That Compliance Is Higher 
When There Is Third-Party Information Reporting,
And Even Higher When Also Subject To Withholding.

With the help of Inflation Reduction Act resources, the IRS is taking a variety of steps to help improve voluntary compliance by improving taxpayer services and offering new technology tools to work in concert with additional compliance work. In fiscal year 2023, the latest year for which data is available, the IRS collected more than $4.6 trillion in taxes, penalties, interest and user fees. 

The voluntary compliance rate of the U.S. tax system is vitally important for the nation. A one-percentage-point increase in voluntary compliance would bring in about $46 billion in additional tax receipts. 

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

FinCEN announced on October 11, 2024 that victims of Hurricane Milton have until May 1, 2025 to file Reports of Foreign Bank and Financial Accounts (FBARs) for the 2023 calendar year.  

FBAR filings for calendar year 2023 would otherwise be due on or before October 15, 2024. FinCEN is offering this expanded relief to any area that is designated both by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance and by the Internal Revenue Services (IRS) as eligible for tax filing relief, as a result of Hurricane Milton.  

If, after the date of this announcement, the IRS designates other areas affected by this natural disaster as eligible for tax filing relief, the areas will receive FBAR relief from FinCEN automatically.  

Deadlines for FBAR filings will be the same as those set forth in IRS designations.  Information on actions that the IRS has taken in response to Hurricane Milton can be found at: 

https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

 In addition, FinCEN will work with any FBAR filer who lives outside the disaster areas but who must consult records located in the affected areas to meet the deadline.  

FBAR filers who live outside the affected areas and who are seeking assistance in meeting their filing obligations (including workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization) should contact the FinCEN Regulatory Support Section at 800-767-2825 or electronically at [email protected]. 

FBAR relief is part of a coordinated federal response to the damage caused by natural disasters and is based on local damage assessments by FEMA.  

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

TIGTA Issued Report Number 2024-IE-R020 on September 30, 2024 entitled the IRS’s Inflation Reduction Act Spending Through June 30, 2024. It provides quarterly and cumulative reporting on the IRS’s use of IRA funding to implement its Strategic Operating Plan and is inclusive of all IRA expenditures through June 30, 2024.  

As Of June 30, 2024, The IRS Expended Approximately $6.9 Billion (11.9 Percent)
of its $57.8 Billion IRA Funding.

In addition to the expended amounts shown on the graphic, the IRS expended approximately $11.6 million in Fiscal Year (FY) 2023 for the direct  e-file tax return system, which is included in the total amount expended. 

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog