How the Corporate Transparency Act Affects Your Business
Lamarre Law Group, P.A. • January 4, 2024
If you own or operate a business in the U.S., you may have heard of the Corporate Transparency Act (CTA). This new law was passed by Congress in 2021 as part of the National Defense Authorization Act. The CTA requires certain businesses to report information about their beneficial owners, who are the individuals who directly or indirectly own or control the business, to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department. The purpose of the CTA is to prevent the misuse of shell companies or other opaque structures by bad actors who want to hide or benefit from their illicit activities, such as money laundering, tax evasion, fraud, terrorism, or human trafficking.
The CTA will have significant implications for many businesses in the U.S., especially those privately held, with few employees, or operating across multiple jurisdictions. In this blog post, we will explain the CTA, who it applies to, what it requires, and what you must do to comply with it.
What is the CTA?
The CTA is a federal law that mandates the creation of a secure, non-public database of beneficial ownership information for certain businesses in the U.S. The database will be maintained by FinCEN, which is the agency responsible for enforcing anti-money laundering and counter-terrorism financing laws in the U.S. The database will only be accessible by authorized officials for national security, intelligence, and law enforcement purposes, as well as by financial institutions, with the consent of the reporting company.
The CTA defines a beneficial owner as any individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise:
- Exercises substantial control over the entity; or
- Owns or controls at least 25% of the entity's ownership interests.
The CTA also defines a reporting company as any corporation, limited liability company, or similar entity that is:
- Created by the filing of a document with a secretary of state or a similar office under the law of a state or Indian tribe
- or Formed under the law of a foreign country and registered to do business in the U.S. by filing a document with a secretary of state or a similar office under the law of a state or Indian tribe.
The CTA excludes certain entities from the definition of a reporting company, such as:
- Entities such as banks, credit unions, insurance companies, public companies, charities, etc., are already subject to federal or state regulation and disclosure requirements.
- Entities that have more than 20 full-time employees in the U.S., file income tax returns in the U.S. reporting more than $5 million in gross receipts or sales, and have a physical presence in the U.S.
- Entities owned or controlled by one or more entities that meet the above criteria.
What does the CTA require?
The CTA requires reporting companies to submit a report to FinCEN that contains the following information for each beneficial owner:
- Name
- Date of birth
- Current residential or business street address
- A unique identifying number from an acceptable identification document, such as a passport, driver's license, or FinCEN identifier
The reporting requirement will take effect on January 1, 2024, and reporting companies will have to update their information whenever there are changes in their beneficial ownership. Reporting companies that existed before the effective date will have to file their initial report within two years after the effective date. Reporting companies formed after the effective date must file their initial report at the time of formation or registration.
The CTA imposes civil and criminal penalties for failing to report, reporting incomplete or inaccurate information, or disclosing or using the reported information in an unauthorized manner. The penalties can range from $500 per day for each day that the violation continues up to $10,000 and/or imprisonment for up to two years.
What do you need to do to comply with the CTA?
If you are a reporting company under the CTA, you need to take the following steps to comply with the law:
- Identify your beneficial owners and collect their information
- File your initial report with FinCEN by the deadline
- Update your report whenever there are changes in your beneficial ownership
- Maintain records of your beneficial ownership information and your filings with FinCEN
- Protect the confidentiality and security of your beneficial ownership information and your filings with FinCEN
- Review and respond to any requests or inquiries from FinCEN or other authorized parties
The CTA is a complex and far-reaching law that will affect many businesses in the U.S. It is essential to understand your obligations and responsibilities and prepare for compliance as soon as possible. If you need help with the CTA or any other tax-related issues, please contact us at Lamarre Law Group, P.A. We are a team of experienced and knowledgeable tax lawyers who can assist you with all your tax needs. We offer a free initial consultation and a flat fee for our services.
We look forward to hearing from you soon.
As a business owner, understanding and managing your tax obligations is crucial to avoid penalties and maintain financial health. Here’s what you need to know about business tax compliance in plain language: 1. Types of Business Taxes: Businesses typically owe federal, state, and sometimes local taxes. These may include income taxes, payroll taxes, sales taxes, and property taxes. Each tax type has specific filing requirements and deadlines. 2. Tax Identification Numbers: Obtaining the correct tax identification numbers (EIN, state ID) is essential for tax reporting and compliance. These numbers are used to identify your business entity to tax authorities. 3. Record Keeping: Maintaining accurate financial records is key. Keep track of income, expenses, deductions, and credits. Good record keeping not only ensures compliance but also facilitates financial planning and decision-making. 4. Filing and Payment Deadlines: Be aware of deadlines for filing tax returns and making tax payments. Missing deadlines can result in penalties and interest charges. Use reminders or software to stay organized. 5. Deductions and Credits: Explore deductions and credits available to your business. These can lower your taxable income and reduce your tax liability. Examples include deductions for business expenses and credits for research and development. 6. Sales Tax Compliance: If your business sells goods or services subject to sales tax, understand your obligations for collecting, reporting, and remitting sales taxes to the appropriate tax authorities. 7. Employment Taxes: Businesses with employees must withhold and pay payroll taxes, including federal income tax, Social Security, and Medicare taxes. Compliance with employment tax obligations is critical to avoid penalties. 8. Seek Professional Guidance: Navigating business tax compliance can be complex. Consider consulting with a tax attorney who specializes in business taxation. They can provide personalized advice, help you understand your obligations, and ensure compliance with tax laws. How We Can Help: At Lamarre Law Group, P.A., our experienced tax attorneys assist businesses with tax compliance, planning, and resolving tax disputes. Whether you’re starting a new business or need guidance with ongoing compliance issues, contact us at (833) Lamarre or visit our website to schedule a consultation.
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Taxes can be overwhelming, especially with the myriad of deductions, credits, and rules that change every year. At Lamarre Law Group, P.A., we're here to simplify the process and ensure you maximize your savings. In this blog post, we’ll break down some common tax deductions you might be missing and show you how we can help. Home Office Deduction If you're one of the many people working from home, you might qualify for a home office deduction. This deduction allows you to write off expenses related to the part of your home used exclusively for business. Expenses can include a portion of your rent or mortgage, utilities, and even internet costs. Charitable Contributions Donations to qualified charities are deductible, and this isn't just limited to cash donations. Non-cash donations, such as clothing or household items, can also be deducted. Remember to keep receipts or other documentation to substantiate your charitable contributions. Education Expenses If you’re pursuing education to improve your job skills, you might be eligible for deductions or credits. The Lifetime Learning Credit, for example, can reduce your tax bill by up to $2,000 annually. Similarly, the American Opportunity Tax Credit offers up to $2,500 per year for the first four years of higher education. Medical and Dental Expenses Unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income are deductible. This includes things like doctor visits, prescription medications, and even some medical equipment. Make sure to keep detailed records of all your medical expenses throughout the year. Retirement Contributions Contributing to a retirement account like an IRA or 401(k) not only helps secure your future but can also provide significant tax benefits. Contributions to these accounts are often tax-deductible, reducing your taxable income for the year. Why Choose Lamarre Law Group, P.A.? Navigating tax deductions can be complex, and missing out on deductions means leaving money on the table. At Lamarre Law Group, P.A., we specialize in tax law and are dedicated to helping our clients maximize their deductions and minimize their tax liabilities. Our expert team will review your financial situation, identify potential deductions, and ensure your tax return is accurate and beneficial. Don’t wait until tax season to start planning. Reach out to us today for a consultation. Our friendly and knowledgeable staff are ready to assist you in person or over the phone. Contact Us Ready to maximize your tax savings? Contact Lamarre Law Group, P.A. today through our online contact form or give us a call at (833) Lamarre. Let us take the stress out of taxes so you can focus on what matters most to you. By partnering with Lamarre Law Group, P.A., you’ll have peace of mind knowing that your taxes are in expert hands. Reach out to us today and take the first step toward a stress-free tax season!
Hello, readers! Today, we’re going to discuss a recent development in tax law that could have significant implications for your estate planning: IRS Revenue Ruling 2023-2. This ruling addresses the tax implications of transferring assets to an irrevocable trust. But don’t worry, we’ll break it down in plain language so you can understand how it might affect you. What Is IRS Revenue Ruling 2023-2? The IRS issued Revenue Ruling 2023-2 to clarify which assets transferred by a decedent to a beneficiary receive the coveted step-up in basis to fair market value under Sec. 1014 and which do not. The ruling specifically addresses a scenario where a grantor makes a lifetime gift of certain assets to an Intentionally Defective Grantor Trust (IDGT) established for the benefit of family members. What Does This Mean for You? In simple terms, the IRS has confirmed that the gifted assets, while taxable to the grantor for income tax purposes, are not eligible for a step-up in basis upon the grantor’s death. This means that if you transfer assets to an irrevocable trust, those assets will not receive a step-up in basis, potentially resulting in higher capital gains taxes for the beneficiaries when they sell the assets. Why Is This Important? This ruling might carry an unpleasant surprise for a trust’s beneficiaries. Before clients revise their estate plans, they should understand the effect that this revenue ruling might have on their heirs. It’s crucial to consider the potential tax implications of your estate planning decisions. How Can Lamarre Law Group, P.A. Help? At Lamarre Law Group, P.A., we specialize in helping individuals and families navigate the complex world of tax law. Our team of expert tax attorneys can help you understand how IRS Revenue Ruling 2023-2 might impact your estate planning strategy and work with you to minimize potential tax liabilities. If you have any questions about IRS Revenue Ruling 2023-2 or any other tax-related matters, don’t hesitate to contact us. You can contact us via our website or call us at Lamarre. We’re here to help you make sense of the tax laws so you can make informed decisions about your financial future. Remember, the tax law is complex, but you don’t have to navigate it alone. Let the experts at Lamarre Law Group, P.A. guide you through the process. We look forward to working with you! Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult with a qualified tax attorney before making any decisions about your personal tax situation.
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Hello, readers! Today, we will break down some complex tax news into simple terms. The IRS has recently announced a major initiative to enhance tax compliance and fairness. Here’s what you need to know: 1. High-Income Earners in the Spotlight The IRS is intensifying its focus on individuals with incomes over $1 million and significant tax debts. Using advanced technology and Artificial Intelligence, they're cracking down on tax evasion, which could have implications for some of our high-income readers. 2. Large Partnerships Under Scrutiny The IRS also closely examines large partnerships, especially those with balance sheet discrepancies, which could indicate non-compliance. 3. Protecting Modest Earners While the IRS is ramping up efforts on the wealthy, they assure that audit rates for those earning less than $400,000 will stay the same. They’re also implementing new safeguards for taxpayers claiming the Earned Income Tax Credit (EITC). 4. Emerging Threats and Scams The IRS is intensifying its efforts to combat emerging threats, such as digital asset non-compliance and FBAR violations. They’re committed to protecting all taxpayers from scams and identity theft. How Can Lamarre Law Group, P.A. Help? Navigating the complexities of tax law can be challenging. That’s where we come in. At Lamarre Law Group, P.A., we specialize in tax law and can provide you with the expertise and guidance you need to understand how these changes might affect you. Whether you’re a high-income earner, part of a large partnership, or a modest earner, we’re here to help you navigate the complexities of tax compliance. Don’t navigate the tax seas alone. Let Lamarre Law Group, P.A. be your compass. Contact us via our online form or call our office at (833) 526-2773. We’re here to help you stay compliant and avoid potential pitfalls in the ever-changing tax law landscape. Remember, tax laws are complex and subject to change. It's always prudent to consult with a tax professional for advice tailored to your specific circumstances. Stay tuned for more updates, and feel free to contact us with any questions. We’re here to help!
The IRS Fresh Start program is a lifeline for those struggling with tax debt. It’s designed to help individuals and small businesses meet their tax obligations without adding unnecessary burdens. Here’s a simple guide to understanding this program and its steps. What is the IRS Fresh Start Program? The Fresh Start program is a set of tax relief initiatives offered by the IRS to people struggling to pay their taxes and get a fresh start with their tax liabilities. Steps to Apply for the IRS Fresh Start Program Gather Necessary Information: Collect all your financial information, such as bank statements, pay stubs, and details of assets and liabilities. You can determine your Eligibility: Based on your circumstances, please understand which option under the IRS Fresh Start program is right for you. Complete the Application: Fill out the appropriate form and submit it to the IRS alongwith any supporting documentation. Pay the Application Fee: Confirm the specific payment prerequisites when filing, as not doing so could delay your application’s processing. Wait for the IRS Review: After submitting your application, wait for the IRS to review your application and determine your eligibility for the IRS Fresh Start program. The IRS Fresh Start program is a valuable resource for those struggling with tax debt. By following these steps, you can navigate the application process and settle your tax debt for less than what you owe. It’s always a good idea to consult with a tax professional, such as the Lamarre Law Group, P.A., if you’re unsure about any part of the process. Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. Just so you know, this is a simplified guide, and the actual process may vary depending on individual circumstances. Always consult with a tax professional for personalized advice.
Tax planning may not sound like the most exciting topic, but it's crucial to managing your finances. Like you plan your weekends and social activities, tax planning is about organizing your money to ensure you keep as much of it as possible. This blog post will explain why tax planning is essential and how it can help you save money and reach your financial goals. Understanding Taxes: Before we dive into tax planning, it's essential to know what taxes are. Taxes are the money we pay to the government to support public services like schools, hospitals, and roads. Different types of taxes, such as income tax and sales tax, impact how much money you get to keep from your earnings. The Importance of Tax Planning: Tax planning is like playing a financial game where you try to pay the least tax while following all the rules. Here's why it's important: Save More Money: By planning your taxes, you can find legal ways to reduce the amount you owe. This means more money stays in your pocket, which you can use for things you enjoy or save for the future. Reach Financial Goals: Whether buying your dream car, saving for college, or starting a business, tax planning can help you save money faster and get closer to your dreams. Avoid Penalties: If you don't pay the right amount of tax, you might face penalties and legal trouble. Tax planning helps you avoid these issues. How Tax Planning Works: Tax planning involves several strategies and decisions. Here are a few simple ones to get you started: Understanding Tax Deductions: You can lower your taxable income by claiming deductions for education expenses or charitable donations. These deductions reduce the amount of money the government taxes. Saving for the Future: Putting money in a savings account or retirement fund can reduce your taxable income and secure your financial future. Keep Records: Keeping track of your income, expenses, and any tax-related documents will make it easier to file your taxes correctly. Seek Help if Needed: Tax rules can be complicated, so asking for help is okay. The Lamarre Law Group, P.A. tax professionals can guide you through the process and ensure you follow the rules. By understanding how taxes work and taking simple steps to plan your finances, you can save more money, reach your financial goals, and avoid any unnecessary problems with the tax authorities. It's a valuable skill that can make a big difference in your financial future, so start learning and practicing tax planning today!
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