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March 11- Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during February, you are required to report them to your employer on IRS Form 4070 no later than March 11. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box eight of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

March 15 – Time to Call For Your Tax Appointment

It is only one month until the April due date for your individual income tax returns. If you have not made an appointment to have your taxes prepared, we encourage you to do so before it becomes too late.

Do not be concerned about having all your information available before making the appointment. If you do not have all your information, we will simply make a list of the missing items. When you receive those items, just forward them to us.
Even if you think you might need to go on extension, it is best to prepare a preliminary return and estimate the result so you can pay the tax and minimize interest and penalties. We can then file the extension for you.

We look forward to hearing from you.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA: https://www.fema.gov/disaster/declarations
IRS: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

March 1 – Farmers and Fishermen

File your 2023 income tax return (Form 1040 or 1040-SR) and pay any tax due. However, you have until April 15 (April 17 if you live in Maine or Massachusetts) to file if you paid your 2023 estimated tax by January 16, 2024.

March 1 – Applicable Large Employers (ALE) – Forms 1095-B and 1095-C

If you are an Applicable Large Employer, provide Forms 1095-C, Employer-Provided Health Insurance Offer and Coverage to full-time employees. For all other providers of minimum essential coverage, provide Form 1095-B, Health Coverage to responsible individuals. See the Instructions for Forms 1094-B and 1095-B and the Instructions for Forms 1094-C and 1095-C for more information about the information reporting requirements.

March 15 – Partnerships

File a 2023 calendar year return (Form 1065). Provide each partner with a copy of their Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., or a substitute Schedule K-1 and, if applicable, Schedule K-3 (Form 1065) or substitute Schedule K-3 (Form 1065). If you want an automatic 6-month extension of time to file the return, file Form 7004. Then file Form 1065 and provide Schedules K-1 or substitute Schedules K-1, and if applicable Schedules K-3, to the partners by September 16.

March 15 – S-Corporations

File a 2023 calendar year income tax return (Form 1120-S) and pay any tax due. Provide each shareholder with a copy of Schedule K-1 (Form 1120-S), Shareholder’s Share of Income, Deductions, Credits, etc., or a substitute Schedule K-1 (Form 1120-S) and, if applicable, Schedule K-3 (Form 1120-S) or substitute ScheduleK-3 (Form 1120-S).

To request an automatic 6-month extension of time to file the return, file Form 7004 and pay the tax estimated to be owed. Then file the return; pay any tax, interest, and penalties due; and provide each shareholder with a copy of their Schedule K-1 (Form 1120-S) and, if applicable, Schedule K-3 (Form 1120-S) by September 16.

March 15 – S-Corporation Election

File Form 2553, Election by a Small Business Corporation, to choose to be treated as an S corporation beginning with calendar year 2024. If Form 2553 is filed late, S treatment will begin with calendar year 2025.

March 15 – Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in February.

March 15 – Non-Payroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in February.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA: https://www.fema.gov/disaster/declarations
IRS: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

Lancaster, PA— Ross Buehler Falk & Company, LLP, a leading public accounting and business advisory firm, is pleased to announce the acquisition of a majority interest in Leid, Lorah, & Company, P.C.  Moving forward, Leid Lorah will be renamed Pennoptic CPAs and Strategic Partners, LLC.

“This new affiliate relationship between Pennoptic CPAs and Strategic Partners, LLC (Pennoptic CPAs) and Ross Buehler Falk & Company, LLP will be a significant benefit for both firms’ clients, team members, and colleagues,” said Jeff Bleacher, CPA, CGMA, Managing Partner of Ross Buehler Falk. “Through this partnership, we can extend our service offerings to Pennoptic CPAs clients and expand the geographic reach of both firms. In addition, we will introduce integrated financial services, a comprehensive approach to assist clients with meeting their financial goals.”

The principals of Leid, Lorah & Company, Mike Leid, CPA, and John Lorah, CPA, will continue to provide client service as part of the Pennoptic CPAs family. Further, the entire Leid, Lorah & Company team will continue to serve clients out of their existing offices in Denver, PA.

“We are very proud of the over 60-year history of our firm; however, we recognize that the next step for our team and our clients is to continue to grow and adapt to best meet their needs,” said Mike Leid, CPA. “This affiliation enables us to expand the range of services we can offer to our clients., including integrated financial services. We are excited at the prospect of providing top-tier solutions and meeting the evolving needs of clients.”

Leid added, “Ross Buehler Falk, its partners, and professional staff share our philosophy of helping clients grow and succeed, and our relationship will broaden and deepen our existing industry specializations, allowing us to offer even more comprehensive business advice tailored to our clients.”

Ross Buehler Falk is a full-service public accounting and business advisory firm serving South Central Pennsylvania. The firm specializes in client accounting services, audit, succession planning, mergers and acquisitions, tax services, and general business counsel. The Ross Buehler Falk team is comprised of over 15 highly seasoned CPAs and Business Advisors. For more information, please visit www.rbfco.com.

Based in Denver, PA, Pennoptic CPAs (formerly Leid, Lorah & Company, P.C.)  has been serving clients in Lancaster and Berks Counties for over 60 years. In addition to their focus on family business and nonprofit organizations, the firm has built a solid reputation working with trust and estate clients. They offer tax preparation and planning, financial reporting, bookkeeping, payroll, and management advisory services. The Pennoptic team is currently made up of 9 experienced accounting professionals.

Starting January 1, 2024, a significant number of businesses will be required to comply with the Corporate Transparency Act (“CTA). The CTA was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (otherwise known as “BOI”) of certain entities from people who own or control a company.

It is anticipated that 32.6 million businesses will be required to comply with this reporting requirement. The BOI reporting requirement intends to help US law enforcement combat money laundering, the financing of terrorism, and other illicit activity.

The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.

Please note that since the FinCEN, and not the IRS, is overseeing the compliance with the CTA, Ross Buehler Falk & Company, LLP,  will not provide services relating to BOI reporting. Businesses should seek competent legal counsel for assistance.

Below is some preliminary information for you to consider as you approach the implementation period for this new reporting requirement. This information is meant to be general only and should not be applied to your specific facts and circumstances without consultation with competent legal counsel.

Frequently Asked Questions

What entities are required to comply with the CTA’s BOI reporting requirement?

Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.

Domestic entities that are not created by the filing of a document with a secretary of state or similar office are not required to report under the CTA.

Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.

Are there any exemptions from the filing requirements?

There are 23 categories of exemptions. Included in the exemptions list are publicly traded companies, banks, credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities, and certain inactive entities, among others. Please note these are not blanket exemptions and many of these entities are already heavily regulated by the government and thus already disclose their BOI to a government authority.

In addition, certain “large operating entities” are exempt from filing. To qualify for this exemption, the company must:

1. Employ more than 20 people in the U.S.;
2. Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
3. Be physically present in the U.S.

Who is a beneficial owner?

Any individual who, directly or indirectly, either:

• Exercises “substantial control” over a reporting company,
• Owns or controls at least 25 percent of the ownership interests of a reporting company

An individual has substantial control of a reporting company if they direct, determine, or exercise substantial influence over important decisions of the reporting company. This includes any senior officers of the reporting company, regardless of formal title or if they have no ownership interest in the reporting company.

The detailed CTA regulations define the terms “substantial control” and “ownership interest” further.

When must companies file?

There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information:

• New entities (created/registered in 2024) — must file within 90 days
• New entities (created/registered after 12/31/2024) — must file within 30 days
• Existing entities (created/registered before 1/1/24) — must file by 1/1/25
• Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days

What sort of information is required to be reported?

Companies must report the following information: full name of the reporting company, any trade name or doing business as (DBA) name, business address, state or Tribal jurisdiction of formation, and an IRS taxpayer identification number (TIN).

Additionally, information on the beneficial owners of the entity and for newly created entities, the company applicants of the entity is required. This information includes — name, birthdate, address, and unique identifying number and issuing jurisdiction from an acceptable identification document (e.g., a driver’s license or passport) and an image of such document.

Risk of non-compliance:

Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $500 per day and up to $10,000 with up to two years of jail time. For more information about the CTA, visit https://www.fincen.gov/boi.

 Will Ross Buehler Falk & Company, LLP, assist in the reporting of this information?

The FinCEN, and not the IRS, is overseeing compliance with the CTA, and therefore, assisting with BOI reporting can be construed as providing illegal services. As such, Ross Buehler Falk & Company, LLP, will not provide services relating to BOI reporting. Businesses should seek competent legal counsel for assistance.

The unrelenting advancement of technology is still going strong even as we enter 2024. The business landscape is poised for transformative changes, driven by ongoing developments that demand organizations to be innovative and adaptive. Below, we explore some key technology trends that businesses should keenly observe to remain competitive.

1. Artificial Intelligence (AI) Advancements: Unlocking New Possibilities

The year 2023 witnessed widespread adoption of generative AI in various applications, from design tools to search engines and office software. This transformative shift changed the way businesses interact with technology.

Continued integration of AI is expected to redefine automation, decision-making processes and customer experiences. Evolving AI algorithms, especially in natural language processing and computer vision, will play a pivotal role. From enhancing customer service interactions to optimizing supply chains and enabling predictive maintenance in various industries, the transformative impact of generative AI will become increasingly evident.

Tech investments geared toward meeting changing priorities will be a hallmark of 2024. More businesses are anticipated to harness AI-driven automation, particularly using Generative Pre-trained Transformers (GPTs), further streamlining operations and enhancing efficiency.

2. Cybersecurity Innovations: Staying Ahead of Evolving Threats

As cyber threats continue to evolve, businesses should anticipate increased data breaches. In response to sophisticated cyber threats, cybersecurity innovations are set to take center stage in 2024. Advanced solutions leveraging AI-driven threat detection and response mechanisms will become more prevalent. The industry will witness an intensified focus on zero-trust security frameworks, heightening data protection measures. Cyber-resilience will be paramount, necessitating proactive measures to safeguard digital assets and ensure business continuity.

3. 5G Technology Implementation: Revolutionizing Connectivity

The widespread adoption of 5G networks will redefine connectivity standards in 2024. Businesses will benefit from faster and more reliable network speeds, unlocking opportunities for innovative applications and services. The increased bandwidth and reduced latency offered by 5G will enable businesses to explore new frontiers in communication, collaboration and data transfer.

4. Edge Computing Expansion: Real-time Data Processing Redefined

Edge computing will gain even more prominence in 2024, playing a pivotal role in real-time data processing and latency reduction. Its integration with Internet of Things (IoT) devices will enable businesses to conduct faster and more efficient data analysis at the source, paving the way for enhanced decision-making and operational efficiency.

5. Blockchain Beyond Cryptocurrency: Transforming Business Processes

Blockchain technology, often associated with cryptocurrencies, will find increased adoption in 2024 for purposes beyond financial transactions. Businesses will utilize blockchain for secure and transparent supply chain management, the execution of smart contracts and the development of decentralized applications. Integration into traditional business processes will enhance security and operational efficiency.

6. Extended Reality (XR) Integration: Shaping Immersive Experiences

Augmented reality (AR) and virtual reality (VR) will expand across industries in 2024. These technologies will play integral roles in training, healthcare, retail and more. Improved XR technologies will deliver more immersive and realistic user experiences, unlocking new possibilities for customer engagement and employee training.

7. Sustainable Technology Solutions: Embracing Environmental Responsibility

A growing emphasis on environmentally friendly technology will be a defining feature of 2024. Businesses will increasingly adopt energy-efficient data centers and integrate sustainable practices into product development. This shift toward green technologies is driven by environmental consciousness and the potential for cost savings and corporate social responsibility.

8. Quantum Computing Developments: Unlocking New Frontiers

Quantum computing will continue to make strides in 2024, with ongoing research potentially leading to practical applications in certain industries. Businesses, particularly early adopters like financial services organizations, will leverage quantum computing to tackle complex problems beyond classical computers’ capabilities, such as fraud detection and optimization challenges.

9. Robotic Process Automation (RPA) Evolution: Intelligent and Adaptive Automation

Robotic Process Automation (RPA) capabilities will witness enhancements in 2024. RPA will not only automate routine tasks and processes but will also integrate more seamlessly with AI, providing more intelligent and adaptive automation solutions. This evolution will contribute to increased efficiency and productivity in business operations.

10. Voice and Conversational Interfaces: Transforming User Experiences

The popularity of voice-activated technologies and conversational interfaces will continue to grow in 2024. These technologies will find applications in customer service and various business operations, enhancing user experiences. Integrating voice assistants into diverse applications will further streamline interactions and improve overall usability.

Conclusion

The technological landscape in 2024 promises unprecedented advancements, challenging businesses to stay abreast of these trends for continued growth and innovation. Staying agile and embracing these technological shifts will be crucial for businesses looking to thrive in an ever-evolving digital era.

Fiduciary accounting, which is also referred to as court accounting, is a way to document and report financial activity during a discrete period of time for legal entities, such as a conservatorship, estate, trust or guardianship.

It’s meant to give adequate notice to all relevant parties when it comes to every consequential financial activity impacting the administration that occurred over the accounting time frame. It shows every disbursement and receipt that is managed by the legal entity’s fiduciary. It accounts for transactions beginning with the initial funding or principal, and the resulting future transactions, including income.

When it comes to the format of fiduciary accounting, along with the United States having its own unique modifications, the Uniform Principal and Income Act requires checking the governing instruments, in addition to state laws, to ensure fiduciary accounting compliance is met. However, looking at the National Standard Format, the following components in a filing are accepted by most courts:

• Documentation of incoming and outgoing monetary sums of the legal entity’s starting principal and income produced
• Documentation of the entity’s liabilities and assets
• Documentation of any payment the fiduciary received
• Legally authorized individuals hired by the fiduciary, what pay they received and their association with the fiduciary

The primary consideration is that being part of being a fiduciary is having a legal duty to the beneficiary of the legal entity, including “the duty to account” to the beneficiary. This duty to account is oftentimes required by the governing document, the state statute, a court order, linked to court proceedings or a beneficiary requesting an accounting. If this duty is breached, the fiduciary may be liable.

The accounting should ensure a reporting of every asset in the legal entity. During the first year, the beginning balance will list the assets that fund the account. For successive accountings, the starting balance and the ending asset values on the preceding accounting should be the same. Along with the assets in custody of the legal entity being documented, any asset that has been withdrawn, paid out or moved must also be documented. Income received from the entity’s investments is to be measured against the principal and income investment schedules to ensure that all income, dividends and interest have been received and reported correctly.

Reasons Why an Accounting is Done

Some of the more straightforward reasons a fiduciary accounting is done is to ensure the fiduciary is compliant. There’s also greater efficiency when doing this annually versus more infrequent intervals, since mistakes can be identified and corrected sooner. The same accounting results can also be used for the entity’s tax filings.

Other reasons concern the fiduciary and beneficiaries. The beneficiary can review and challenge the accounting if there’s impropriety suspected. When the fiduciary has completed their responsibilities for the beneficiaries and entity, liability for the fiduciary may cease to exist, even if the beneficiaries decline to execute a receipt, release and refunding agreement (or similar document). If an approved accounting is necessary to be submitted with a court, the above four documents may be considered an acceptable substitution in place of an accounting.

Regardless of the type of legal entity that requires this type of fiduciary accounting, a fiduciary that is diligent and works with an accounting and legal professional can reduce the chances of exposing themself and their supervising entities from unnecessary exposure.

For many, buying a home is the biggest asset they will ever own. However, you aren’t able to fully benefit from that asset until you pay off the mortgage; until then it is technically a liability. The most common length of a mortgage loan is 30 years, but most people either sell their home, refinance their mortgage – or even pay it off before the end of that term.

What are the pros and cons of paying off a mortgage early? Obviously, you no longer have to make monthly payments, so money can be directed elsewhere. It is advisable to pay off your mortgage before you retire, when most people live on a lower, fixed income. By having the mortgage paid off, that money can be redirected to other household expenses and/or provide higher discretionary income.

It should be noted that paying off your mortgage doesn’t provide relief from other routine, high-ticket home expenses such as property taxes, homeowners’ insurance or regular maintenance. However, owning your home outright means it can’t be foreclosed on and taken from you. It also provides a large financial asset from which you can tap the equity or sell for a windfall.

While paying off your mortgage can provide security and peace of mind, you should consider all the factors before going down this path. For example, you may not have enough discretionary income to devote to making extra payments to your mortgage loan principal.

Usually in the first 10 to 20 years of homeownership, buyers are juggling a multitude of financial obligations – raising a family, building an emergency fund, saving for college, taking annual vacations and investing for retirement. That doesn’t always leave a lot of money left over for your mortgage.

There are, however, different strategies you can use to pay off a mortgage early:

• Pay an extra amount toward your principal along with your regular payment every month.
• Pay an extra amount each year, such as from a work bonus or other annual windfall.
• If you continue working after retirement age, you may want to allocate required minimum distributions (RMDs) from a retirement account toward your mortgage.
• Make large payments each year from an inherited IRA transferred from a deceased parent’s retirement account. Non-spouse heirs generally have 10 years to use up these funds. By withdrawing only a portion of the funds each year, the inherited IRA may continue to grow over the full 10-year period.
• Pay off fully or a significant portion of the mortgage using other inherited funds from a deceased parent.

Not only does paying off the mortgage early shorten the life of the loan, but it also can save you tens of thousands of dollars in interest payments.

For some people, paying off a mortgage early may not be their best strategy. After all, if they have locked in a low, fixed interest rate on the loan for the entire term, their excess income may be better deployed to an investment portfolio. Over a 15-, 20- or 30-year period, regular contributions to an investment portfolio can earn even more than the equity built up in a home.

If you’re locked into a high-interest rate mortgage, you may want to consider refinancing when rates are adjusted downward. This can help you allocate more money toward your principal. However, don’t be quick to refinance to a lower rate if you already have a low rate, as mortgages are structured to pay a higher percentage of interest on the front end of the loan. When possible, it’s best to refinance or pay extra principal in the early years of the loan rather than the later years – because refinancing could cause you to pay more interest in another front-loaded loan for another long term. Also be aware that some mortgages have an early payoff penalty, generally during the early years of a refinance, so check before you pay it off early.

Another consideration is that mortgage interest is tax deductible, which may be a key tax saver for those in a high tax bracket.

It’s a good idea to pay off any high-interest debt you may owe, such as credit cards, auto or student loans before paying down your mortgage early. These debts may be costing you more money than you can save paying off a low-interest mortgage. Once you’re debt free, you can redeploy those payments toward your mortgage principal.

The decision to pay off a mortgage early depends on your situation and your priorities. Specifically, if you still need to build an emergency reserve fund, catch up on retirement savings, or pay down high-interest debt, you might be better off allocating money elsewhere. By the same token, if the investment markets are enjoying an upward trend and you have a low-interest mortgage, you may want to just let your money “ride” in the market so you have more available later – perhaps then you can pay off your mortgage before you retire.

In an era where financial scams are becoming increasingly sophisticated, protecting your IRS payments demands more awareness than it once did. Check washing fraud, a technique where thieves steal checks from the mail, erase crucial information, and manipulate the payee and amount, has seen a resurgence. Understanding exactly how this crime is committed is essential if you want to protect yourself and your loved ones. In this guide, we will also look at implementing preventive measures to secure your financial transactions.

What is Check Washing Fraud

Check washing is a multi-step process criminals use to steal money from unsuspecting victims. The scheme unfolds as follows:

1. Mail Theft: Criminals target checks in the mail, either from mailboxes or USPS collection boxes. This can involve individuals acting alone or as part of organized crime rings.
2. Chemical Alteration: Stolen checks undergo a chemical washing process that erases the payee information and amount, leaving the signature and paper intact. Alternatively, criminals may attempt to scratch off existing details.
3. Forgery: Once the check has been prepared, criminals then inscribe new information on the blank check, changing the name and amount at will.
4. Deposit and Withdrawal: The manipulated check is deposited into a bank account, either through traditional means or using mobile deposit services. Subsequently, the criminals swiftly withdraw the funds.

This process may involve different “actors” from the crime ring specializing in distinct roles, such as stealing, washing, or cashing checks, contributing to the scheme’s complexity.

Mitigating Risks: Protective Measures

To shield yourself from becoming a victim of check washing fraud, consider implementing the following safeguards:

1. Embrace Electronic Transactions: Shift towards electronic bill pay, transfers, and peer-to-peer payment apps, minimizing reliance on physical checks.
2. Opt for Secure Writing Practices: Use black gel pens, known for ink that is challenging to wash off. Brands like Uni-Ball pens with Super Ink claim added protection against fraud.
3. Mail Safely: If mailing checks is unavoidable, drop them off at the post office to minimize theft risks. Avoid using USPS collection boxes, especially in less-traveled areas.
4. Mailbox Vigilance: Regularly retrieve mail from your mailbox, and sign up for Informed Delivery from USPS to monitor expected mail.
5. Travel Considerations: When traveling, request a USPS mail hold to safeguard your mail from potential theft during your absence.
6. Financial Oversight: Frequently review your checking account for unusual or unexpected withdrawals, promptly identifying any signs of unauthorized activity. If you see a suspicious transaction, contact your bank or credit union immediately for assistance.

Responding to Fraud: Taking Swift Action

If you suspect check theft or notice forged checks, take immediate action:

1. Contact Your Bank: As noted, report any incidents to your bank immediately, enabling them to take preventive measures such as putting a hold on the check.
2. File a Police Report: In case of deposited forged checks, file a police report and work closely with your bank. Reimbursement policies may vary, and investigations could extend over months.
3. Regulatory Intervention: If disputes persist, reach out to the bank’s regulator for assistance. Utilize resources like HelpWithMyBank.gov for national banks and relevant links for credit unions and state-chartered banks.
4. Report the crime to the USPS.

Dealing with IRS Tax Obligations

Our office is here to help you navigate the outcome of financial fraud and the IRS. Below are some issues we need to resolve as we prepare to take action.

1. Assessing the Damage:

• Examine your IRS payment obligations to determine the impact of the lost funds.
• Identify the specific taxes owed and any associated penalties or interest.

2. Contacting the IRS:

• We will reach out to the IRS immediately to report the situation.
• Explain the circumstances surrounding the lost funds and inquire about potential relief options on your behalf.

3. Penalty Relief Programs:

• In cases of financial hardship due to fraud, the IRS may offer penalty relief programs.
• We will explore available options such as the First-Time Penalty Abatement or the Reasonable Cause Assistant.

4. Establishing a Payment Plan:

• We will work with the IRS to establish a viable payment plan based on your current financial situation.
• Discuss installment agreements or other arrangements to fulfill your tax obligations over time.

Beyond Check Washing: Monitoring Identity Theft

Recognizing that check thieves may exploit personal information, remain vigilant against identity theft:

1. Credit Monitoring: Regularly check your credit or use monitoring services with free alerts to swiftly detect any attempts to open credit accounts using your information.
2. Identity Theft Protection: Explore identity theft protection services offering financial and logistical assistance in case of identity restoration needs.

By staying informed and implementing these measures, you strengthen your defenses against check washing fraud and other financial threats, ensuring the security of your IRS payments. Don’t let sophisticated scams compromise your financial well-being—take charge of your financial security today.

In a significant development to assist individuals, businesses, and tax-exempt organizations grappling with back taxes, the Internal Revenue Service (IRS) has introduced new penalty relief for approximately 4.7 million entities that did not receive automated collection reminder notices during the pandemic.

The IRS is allocating around $1 billion in penalty relief, primarily benefiting those with annual incomes below $400,000. The temporary suspension of automated reminders during the pandemic led to the accrual of failure-to-pay penalties for taxpayers who didn’t fully settle their bills after the initial notice.

The IRS proactively addresses this before resuming regular collection notices for tax years 2020 and 2021. It plans to issue unique reminder letters next month, alerting taxpayers of their liabilities, providing convenient payment options, and specifying the amount of penalty relief, if applicable.

For those unable to pay their full balance, the IRS encourages them to visit IRS.gov/payments to make arrangements. Additionally, the IRS is waiving failure-to-pay penalties for eligible taxpayers affected by this situation for tax years 2020 and 2021, which are estimated to cover 5 million tax returns and save taxpayers $1 billion.

The penalty relief is automatic, requiring no action from eligible taxpayers. The IRS has adjusted individual accounts first, followed by business accounts and, subsequently, trusts, estates, and tax-exempt organizations. Notice 2024-7PDF outlines how the agency is providing relief and addressing COVID-19-related challenges.

Commissioner Danny Werfel emphasized the IRS’s commitment to looking out for taxpayers, especially those who haven’t received notices for an extended period. This penalty relief is a common-sense approach to supporting individuals facing unexpectedly more significant tax bills.

Eligible taxpayers are automatically entitled to this relief, including individuals, businesses, trusts, estates, and tax-exempt organizations with assessed tax under $100,000 for tax years 2020 or 2021. If a taxpayer has already paid failure-to-pay penalties related to these tax years, the IRS will issue a refund or credit the payment toward another outstanding tax liability.

It’s crucial for affected taxpayers to understand this relief’s eligibility criteria and automatic nature. The penalty relief only applies to those with assessed tax under $100,000, and it will resume on April 1, 2024 for eligible taxpayers who don’t take advantage of this relief. If you find yourself in this situation, seeking professional help can be invaluable in navigating these changes, avoiding pitfalls, and ensuring compliance with federal tax obligations.

Our team of tax experts is ready to assist you – contact our office today for guidance tailored to your specific circumstances.

Businesses, whether operating as a corporation, partnership, or a sole proprietorship, have been required to electronically file information returns when the aggregate number of these returns, regardless of the type of return, for a tax year was more than 250. The IRS issued regulations in February 2023 lowering the threshold to 10 or more returns, effective with the returns filed on or after January 1, 2024. For the most part, this means the electronic filing mandate will apply to 2023 information returns.

Some small businesses that previously filed paper information returns, because the number of information returns they had to issue was below the 250 threshold, will now find that they will need to file the forms electronically. Under the prior rules, the threshold number of returns for required e-filing applied separately to each type of return, while under the new regulations, all types of information returns are combined when totaling up the number of returns required to be filed.

Affected employers may need significant lead time to implement new software, policies, and procedures to comply with the new rules. Thus, even though electronic filing is not required until 2024 for the 2023 tax year, employers should evaluate what changes may be needed. Simply doing the “same as last year” will not work for many employers.

Why the e-filing mandate? The IRS believes that the electronic filing mandate is necessary due to the sheer volume – some four billion information returns – they receive each year. Although about 99% of all information returns in 2019 were e-filed, that still left nearly 40 million paper information returns for the IRS to handle. And as became all too apparent during the COVID-19 crisis, paper filings bog down the IRS’s ability to efficiently process returns. In instituting the lower threshold, the IRS also noted that electronic filing has become more common, accessible, and economical, as evidenced by the prevalence of return preparers and service providers who offer electronic-filing services; by the availability of relevant software; and by the numbers of returns already being filed electronically on a voluntary basis.

What is an Information Return? So, you might wonder what an information return is. You are probably familiar with Form W-2 that reports annual wages of an employee, Form 1099-NEC for nonemployee compensation paid to an independent contractor, Form 1099-INT that gives the year’s interest income paid by a bank or other financial institution, and Form 1098 that is issued by a lender and reports the home mortgage interest a taxpayer paid during the year. These are all information returns, but there are significantly more types of information returns. Following are the information returns affected by the new e-file mandate:

• Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding;
• Forms in the 1094 series;
• Form 1095-B, Health Coverage;
• Form 1095-C, Employer-Provided Health Insurance Offer and Coverage;
• Form 1097-BTC, Bond Tax Credit;
• Form 1098, Mortgage Interest Statement;
• Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes;
• Form 1098-E, Student Loan Interest Statement;
• Form 1098-Q, Qualifying Longevity Annuity Contract Information;
• Form 1098-T, Tuition Statement;
• Forms in the 1099 series, such as those noted above (including Form 1099-QA, Distributions from ABLE Accounts);
• Form 3921, Exercise of an Incentive Stock Option Under Section 422(b);
• Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c);
• Forms in the 5498 series (but not Form 5498-QA, ABLE Account Contribution Information, which must be filed on paper);
• Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips;
• Form W-2, Wage and Tax Statement, and the similar wage and tax statements for the U.S. possessions; and
• Form W-2G, Certain Gambling Winnings

Other filings affected by the e-file mandate – The regulations also require e-filing of certain returns and other documents not previously required to be e-filed. Returns affected by the electronic filing mandate, and not listed above, include partnership returns, corporate income tax returns, unrelated business income tax returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns, among others. However, the ten-return threshold does not make electronic filing mandatory for employment tax returns, such as Forms 940 and 941.

A partnership with more than 100 partners must file its information returns electronically regardless of the number of information returns the partnership must file during the calendar year.

If your trade or business receives more than $10,000 in cash in one transaction (or two or more related transactions), you must file Form 8300, “Report for Receipt of Over $10,000 in Cash” within 15 days of receiving the income. This is not a new requirement. But for Forms 8300 required to be filed after December 31, 2023, Form 8300 must be filed electronically if the business is required to electronically file at least 10 information returns and/or wage and tax statements during the calendar year.

Example – During calendar year 2024, XYZ Company is required to file the following forms for tax year 2023: 4 Forms 1099-NEC (non-employee compensation), 4 Forms 1099-DIV (dividends), and 2 Forms W-2 (employee wages), for a total of 10 returns. Because XYZ is required to file 10 information returns during calendar year 2024 for tax year 2023 reporting, the company must electronically file all of its tax year 2023 Forms 1099-NEC and 1099-DIV with the IRS, and electronically file its tax year 2023 Forms W-2 with the Social Security Administration. Thus, if the business meets the 10-return threshold for 2023 information returns that must be e-filed in 2024, then any 8300 filed during 2024 must also be e-filed.

Corrected information returns – If an error was made on an information return that was required to be filed electronically, the corrected information return required to be filed during calendar years beginning after December 31, 2023 also must be filed electronically. However, if an original information return was allowed to be, and was, filed on paper, any corresponding corrected information return must be filed on paper.

Penalties – Penalties under IRC Section 6721 may apply for non-electronic filing of information returns (e.g., Forms W-2, 1099-series, etc.) when electronic filing is required. Such penalties may also apply for non-filing, late filing or incorrect information. The potential penalty in 2024 is up to $310 per information return, up to an annual maximum of $3,783,000. For businesses with annual gross receipts of less than $5 million, the maximum is $1,261,000. Penalty amounts are indexed and change annually.

Waivers – A business may file a request for a waiver from having to electronically file information returns due to undue hardship. For more information businesses can refer to Form 8508, Application for a Waiver from Electronic Filing of Information Returns

IRS portal – To facilitate compliance, the IRS has an online portal to help businesses file Form 1099 series information returns electronically. Known as the Information Returns Intake System (IRIS), this free electronic-filing service is secure, accurate and requires no special software. Though available to any business of any size, IRIS may be especially helpful to small businesses that currently file Forms 1099 on paper to the IRS.

Even if filers are not required to file electronically under the new rules, they may want to consider doing so, as electronic filing has become more common, accessible, and economical. Electronic filing may reduce administrative efforts compared to paper filing, can increase accuracy, and improve record retention.

The new mandatory electronic filing rules are complicated and penalty exposure may be significant. If you have questions about the new e-file mandate for information returns or would like assistance in meeting your obligation to e-file information returns for your business, please contact this office.