A very happy early Independence Day to you! Here’s your monthly rundown of a few pieces of tax news impacting you, your business, and your clients.
In today's newsletter:
ERC audits
The Corporate Transparency Act of 2020
Fiscal Responsibility Act
ERC audits are here
We knew it was coming - the IRS is now auditing ERC claims. The ERC was listed at the top of the IRS’s annual Dirty Dozen list of tax scams for 2023. What does this mean for your clients?
Anyone can be audited! The rumor that the IRS will only audit claims for $100,000 or more is FALSE.
Audit notices will come by mail and will request that you call to confirm the appointment.
Only Form 941/941x is being audited, not the corresponding amended income tax returns.
The audit letter includes:
Request for documentation to support eligibility of the claim
Request for documentation to support the calculation of the credit shown on the 941s
Instructions for sending documents - method (mail, fax) & format (Word, Excel or PDF)
The Corporate Transparency Act (CTA)
This legislation is largely unfamiliar to practitioners and business owners alike, but it could have a massive impact on small businesses. What is it?
The act states that corporations, LLCs, and other entities formed under state law or similar entities formed under foreign law and registered to do business in the U.S. must disclose the “beneficial owners” beginning January of 2024.
Failure to do so may result in heavy fines and possible criminal penalties.
Padgett has partnered with the AICPA and others in the accounting community to distribute informational sheets on the Beneficial Ownership Information component of the CTA.
You probably saw this bill on the news that suspended the US debt ceiling, narrowly avoiding a default. Did you notice the provisions affecting the IRS budget? Here are 3 notable items to be aware of.
It rescinds $1.39 billion in the original $80 billion funding to the IRS. Additionally, it pares back funding by about $10 billion each year for 2024 and 2025.
The IRS has commented on the recent budgetary limitations stating the cuts will not prevent the tax agency from moving ahead with its strategic plans to hire more employees, improve taxpayer service and modernize its technology. Furthermore, ERC audits will not be affected by these cuts.
After three years and several extensions, student loan repayments that were paused due to Covid will resume in October! Borrowers will be notified by the Department of Education prior to the first repayment due date.
As a reminder, we share these and further actionable updates every month in our franchisee-exclusive Tax Chats. Not sure where your responsibility lies with the CTA? Wanted to hear more about the impact of the Fiscal Responsibility Act? If you’d like to learn more about how you could experience more of the benefits of Padgett, attend an info session.
We have a podcast!
Want more tax updates and accounting insights? Tune in every other week to Federal Tax Updates! Hosts Roger Harris, EA and Annie Schwab, CPA help you keep up-to-date with the latest federal tax information while earning approved CPE and CE credits.
At Padgett, our mission is simple: help business owners focus on their passion by supporting them through the tasks that take time away from doing the work they love. We empower accountants, bookkeepers and tax professionals across the country to run their own firms with freedom and confidence. If you'd like to know more about the benefits of becoming a Padgett firm, contact us today.
