CTA Due Dates and Penalties | Tax Bill Changes for 2023

Week 3 of our CTA Update Series – Due Dates and Penalties

Initial Report Due Dates for Beneficial Ownership Information (BOI) Reporting:

• Existing Entities (created/registered by 12/31/2023) – must file by 1/1/25.
• New entities (created/register in 2024) – must file within 90 days.
• New entities (created/registered after 12/31/2024) – must file within 30 days.

Updates to BOI Reporting:

• You must file an updated BOI report if there are any changes to the information reported on the initial BOI report about your company or the beneficial owner(s). An updated report must be filed no later than 30 days after the change occurred.

Examples of when an updated BOI report would be required:

• Any change to the previously reported information for the reporting company. For example, when there is a change to the business name.
• Any change to a beneficial owner’s name, address, or unique identifying number. In addition, an image of the new identifying document would also need to be submitted if the document has a change of name, address, or identifying number.
• There is a change in the beneficial owner(s). Examples include a change in ownership interest that meets the 25 percent ownership threshold or hiring of a new CEO.
• The reporting company qualifies for exempt status after filing the initial BOI report.

Penalties

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 www.aicpa-cima.com/boi.

In reference to late filing of updated BOI reports, you may avoid penalties if you correct the mistake and/or omission within 90 days of the deadline for the original report

Important Update for Tax Year 2023

We have been closely monitoring the legislative developments in Congress, and a bill is on the verge of being passed that will have a direct impact on the treatment of taxes. Specifically, the bill proposes the following:

- The repeal of Section 174 of the Internal Revenue Code. This section currently requires businesses to capitalize R&D expenses, spreading the deduction over several years. If the bill is passed as expected, for the tax year 2023, businesses will no longer be required to capitalize their R&D expenses. Instead, companies will be able to deduct these expenses in the year they are incurred. This change could lead to significant tax savings and affect your company's financial planning and budgeting.

- Extension of 100-percent bonus depreciation for qualified property placed in service after December 31, 2022, and before January 1, 2026. The provision retains 20-percent bonus depreciation for property placed in service after December 31, 2025, and before January 1, 2027, as well as for specified plants planted or grafted after December 31, 2025, and before January 1, 2027.

- Extension of Allowance for Depreciation, Amortization, or Depletion in Determining the Limitation on Business Interest. — Under the proposed law, the 30% limitation on business interest will be based on the pre-2022 standard which did not reduce taxable income by depreciation and amortization. This could substantially increase the amount of business interest deductible in 2022 through 2026.

- Employee Retention Tax Credit With regard to the Employee Retention Credit (ERC), this bill would implement a new deadline requiring all ERC claims to be filed by January 31, 2024.

While this news is promising, it is important to note that the bill has not yet been finalized. Our team is vigilantly tracking its progress and will provide you with updates as they become available. In the meantime, we recommend beginning to prepare for this potential change in tax treatment. This may involve revising your tax planning strategies and considering the impact on your financial statements.

We understand that changes in tax law can be complex and sometimes overwhelming. Our team is here to help you navigate these changes and ensure that your business is positioned to take full advantage of any new tax benefits.

Thank you for your continued trust in our services. We are committed to supporting your business through these changes and ensuring your tax strategy is optimized for your success.