This bulletin was written by GFC’s legal counsel, Gravel & Shea. Questions regarding CTA requirements should be directed to your business or organization’s legal counsel, as the CTA is a legal matter and not a tax filing matter. 

Corporate Transparency Act 

On January 1, 2024, the Corporate Transparency Act (the “CTA”) took effect, imposing reporting and disclosure requirements on new and existing business entities. 

The CTA requires legal entities operating in the United States to file beneficial ownership information (“BOI”) reports with the Financial Crimes Enforcement Network (“FinCEN”). Exemptions to the reporting requirement exist, but are narrowly tailored to heavily regulated industries and large operating companies. Most small businesses will need to file BOI reports. 

Enacted in 2021, the CTA marks a material change in US federal regulations governing the identification and disclosure of beneficial ownership of reporting companies. The stated objective is to enhance transparency and assist law enforcement agencies in combating financial crimes such as money laundering, tax fraud, and other illicit activities. 

The reporting and disclosure obligations fall on “Reporting Companies” that include most entities formed through a filing with a state secretary of state’s office. Reporting Companies include most corporations, limited liability companies and limited partnerships. 

Each Reporting Company is obliged to submit specifically defined information in its BOI reports about: (a) the Reporting Company itself; (b) its “Beneficial Owners”; and (c) the persons involved in forming the Reporting Company (“Company Applicants”). Beneficial owners include all persons that either own or control at least twenty-five (25%) of the ownership interests in the Reporting Company, or exercise substantial control over the Reporting Company. All Beneficial Owners and Company Applicants will need to report their full legal name, address, and upload a copy of a qualifying identification document (driver’s license, passport, etc.) on the BOI report. 

Reporting Companies must file their initial BOI report with FinCEN within thirty (30) days of formation (for domestic Reporting Companies) or registration (for foreign Reporting Companies). FinCEN has increased the filing deadline to ninety (90) days for entities formed or registered in 2024. Reporting Companies, including those formed or registered in 2024, must report any changes to information previously disclosed in a BOI report to FinCEN within thirty (30) days of the change. Non-exempt business entities in existence before January 1, 2024, must file their initial BOI report with FinCEN before January 1, 2025. FinCEN has created an online portal known as the “Beneficial Owner Secure System” (“BOSS”) for Reporting Companies to submit BOI reports. BOSS is now live and accepting BOI reports. 

Reporting Companies that provide false or fraudulent information on BOI reports or willfully fail to comply with the CTA reporting requirements may face civil or criminal penalties of five hundred dollars ($500) per day, a fine of up to ten thousand dollars ($10,000) and/or up to two (2) years of imprisonment. 

To avoid liability and penalties, it is crucial for all entities operating in the United States to understand and comply with the CTA reporting obligations. FinCEN continues to issue and update CTA guidance, which can be found at https://fincen.gov/boi. 

There are important recent developments related to Employee Retention Credits (ERC) that we feel clients should be aware of. 

1. IRS has publicly alerted taxpayers of third-party firms claiming to specialize in ERC and filing extremely aggressive claims without fully informing taxpayers of the risks and preparing appropriate analysis / documentation.
2. IRS recently put a moratorium on issuing ERC refund checks on new applications. Click here to learn more (IRS.gov)
3. IRS also recently announced a withdrawal process for ERC claims that have not been paid, but for which taxpayers now realize may be too aggressive. Click here to learn more (IRS.gov) 
4. IRS has also published that they are going to create a repayment program for taxpayers who already got their refund but want to return it to the IRS to lower or absolve their risk altogether related to ERC.  No details are released yet, but we anticipate this in the coming months.
5. The Treasury department is considering expanding the statute of limitations for ERC claims, which would give the IRS more time (2 additional years) to examine ERC claims.  This could pose a potential problem with respect to the statute of limitations on the income tax returns for the related years, whereby taxpayers have already paid income tax on ERC refunds, and could lose the ability to ask for those income tax payments back.

We strongly encourage clients who used third-party providers to claim ERCs understand how they specifically qualify for the ERC program and also have the necessary documentation and analysis to support an IRS audit in the future. Before any IRS repayment programs close, clients should ensure that they completely understand their potential benefits and risks of their ERC claims.

Please reach out to your GFC engagement team with questions or comments as you consider this news and taking any action.

The information below applies to Vermont taxpayers only. You can disregard this notice if you are not a Vermont business or individual taxpayer.

The IRS has provided tax filing relief for taxpayers that reside or have a business in Vermont affected by flooding. Affected individuals and businesses now have until November 15, 2023 to file returns and pay many taxes that were originally due on or after July 7, 2023 and before November 15, 2023.

The extended deadline applies to many payments normally due during this period, and may include:

• Corporate and business income tax, including estimated payments
• Sales and use tax
• Meals and rooms tax
• Specific payroll withholding tax
• Estimated personal income tax payments, originally due September 15, 2023
• Filing of 2022 income tax returns with a valid federal and/or Vermont extension

The Vermont-specific tax relief applies to those impacted by July’s severe flooding; taxpayers not impacted by the flood are expected to file and pay taxes by their original due dates.

To view information from the State of Vermont about the tax extension, click here.

To view information from the IRS about the tax extension, click here.

Please note: GFC will not be delaying client work for the upcoming 9/15 and 10/15 deadlines unless we have specific discussions with clients around the need and applicability to utilize the revised 11/15 timeline. If you have questions about these extensions, please reach out to your GFC tax team members.