Blog

According to Law360, a Maine federal judge upheld the Corporate Transparency Act, rejecting one of several challenges across federal courts claiming Congress lacked the power to require companies to disclose their real owners.

U.S. District Judge Stacey D. Neumann on Friday granted a motion for summary judgment from the government while denying a similar bid from William Boyle, a majority owner of Maine-based LLCs, who sued in March seeking a declaratory judgment that the CTA is unconstitutional.

The judge said Congress appropriately found that the so-called beneficial ownership information called for in the CTA is necessary for protecting interstate and foreign commerce, and that lawmakers "asserted a rational basis for concluding the existence of corporate entities has a substantial effect on interstate commerce."

"In Light Of The Massive Role Corporate Entities Play In 
The Modern Economy, The Court Readily Finds A Rational
Basis Exists To Conclude Corporate Entities' Existence Has A Substantial Effect On Interstate Commerce,"
Judge Neumann Said.

"Therefore, Congress may regulate such entities, and the CTA is authorized by the commerce clause."

Boyle had argued that the CTA is not regulating activities that substantially affect interstate commerce, and Judge Neumann noted the plaintiff focused "largely on dormant entities that own no assets and make no transactions." But the judge said it "strains credulity to imagine that any significant portion of the 2 million entities formed each year will exist perpetually without engaging in commercial transactions."

Daniel L. Rosenthal of Marcus Clegg, counsel for Boyle, said in a statement that he thinks other U.S. district courts that have found the CTA to be likely unconstitutional "reached the right conclusion."

"We're disappointed with the ruling and will be reviewing it and considering our client's options going forward, including an appeal to the First Circuit." Rosenthal said of Friday's order.

The law remains paused nationwide as a result of a suit alleging Congress exceeded its authority under the constitution's commerce clause by enacting it. 

Cases are underway at four circuit courts, and more are in the pipeline, making it likely that the matter will ultimately be resolved by the justices, attorneys previously told Law360.

Need Help Filing Your BOI Report?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

Read more at: Tax Times blog

In a News Release, the Department of Justice (DOJ) announced that several U.S. district courts have authorized the IRS to serve John Doe summonses on various Trident Trust entities. The summoned entities are members of a multinational group of affiliated companies known as the "Trident Trust." Group."

The U.S. District Court for the Northern District of Georgia entered an order earlier this week authorizing the IRS to serve John Doe summonses on TT (USA) Holdings Inc.; Trident Corporate Services Inc. and Trident Fund Services Inc., entities that are members of a multinational group of affiliated companies generally operating under the trade name “Trident Trust” and collectively referred to as the “Trident Trust Group.”

Separately, on Dec. 18, 2024, the U.S. District Court for the District of South Dakota entered an order, unsealed on Jan. 21, authorizing service of a similar John Doe summons on Trident Trust Company (South Dakota) Inc. The United States also previously obtained approval in the U.S. District Court for the Southern District of New York for the IRS to serve John Doe summonses on a different affiliate entity of the Trident Trust Group, as well as to third party financial service companies, banks and courier services that may have information about Trident Trust Group’s U.S. taxpayer clients.

The United States is not alleging that any of the entities engaged in wrongdoing. Rather, the IRS uses John Doe summonses to obtain information about possible violations of internal revenue laws by individuals whose identities are unknown. These summonses seek information about U.S. individuals who may have used the Trident Trust Group’s services to underreport their worldwide income and conceal their ownership of certain foreign assets that U.S. individuals are required to report to the U.S. government.

A declaration from an IRS revenue agent that accompanied the petitions alleges that at least nine U.S. taxpayers used Trident Trust Group’s services to avoid compliance with U.S. tax laws. The declaration further alleges that the IRS learned of this noncompliance through the Offshore Voluntary Disclosure Program, a program that allowed U.S. taxpayers to voluntarily disclose foreign accounts or entities used to evade tax in exchange for settling their civil liabilities on fixed terms.

A representative of Trident Trust responded to us that:

“We are aware of the IRS petitions. Each of our trust and corporate services businesses is regulated in the jurisdiction in which it operates and is fully committed to compliance with all applicable regulations. All clients are assessed via a thorough onboarding process.    

“Trident Trust proactively informs the relevant authorities where any compliance process gives rise to concerns.  We also fulfil our obligations in relation to the Automatic Exchange of Information in taxation matters, including FATCA and CRS reporting.”  

 Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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

On January 13, 2025 we posted, as of December 26, 2024, the Enforcement of BOI Reporting Is Again Temporarily Halted Due To a Nationwide Injunction, where we discussed thatas of december 26, 2024, the enforcement of beneficial ownership information (boy) reporting requirements is temporarily halted due to a nationwide injunction (again).

 On January 24, 2025 FinCEN posted an alert about an order issued in a separate case, Smith v. U.S. Department of the Treasury (135 AFTR 2d 2025-370, DC TX, 1/7/2025). In that case, a federal district court enjoined enforcement of the CTA only as to the named plaintiffs. However, the Smith court stayed the effective date of the beneficial ownership reporting rule pending the outcome of the case, putting the rule on hold as to all reporting entities.

In light of this federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. 

However, reporting companies may continue to voluntarily submit beneficial ownership information reports. 

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

According to Law360,  the Internal Revenue Service will keep using an educational compliance tool called soft letters to prod taxpayers to comply with a centralized partnership audit regime that has recently turned its focus to larger and more complicated entities, an agency official said.

Soft letters, which the agency commonly sends out as a compliance measure in other areas, will be an ongoing effort in a relatively new practice area for pass-through entities within the IRS' Large Business and International Division, according to Clifford R. Scherwinski, director of that practice area. He spoke during the D.C. Bar Tax Conference, held in Washington, D.C., and online.

 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