In 2021, Congress enacted the Corporate Transparency Act in an effort to provide law enforcement agencies with the ownership information of business entities doing business in the U.S. This information is to be used to help prevent money laundering, the use of shell companies, and other financial crimes. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN, the same agency that administers the foreign bank account reporting rules) was charged with running this program often called “Beneficial Ownership Information Reporting” (BOI). The program’s rules apply very broadly so nearly all privately held businesses will be required to comply beginning January 1, 2024. FinCEN expects over 32 million entities will be filing their initial reporting in 2024. The program was designed to help prevent financial crimes but the compliance burden is falling on privately held businesses across the U.S. and according to recent surveys, most business owners are completely unaware of this new program. FinCEN has created a guide, Small Entity Compliance Guide, FAQs, and informational videos to help businesses understand and comply with these new rules. (more…)
August 26, 2022 Update to Expand CalSavers to More Workers
Governor Newsom signed an amendment, S 1126, requiring all employers within the state of California with at least one worker to participate in the CalSavers program (reducing the minimum from five workers). The amendment is expected to take effect prior to December 31, 2025, and continues to apply to employers that do not otherwise offer a retirement plan to their employees.
May 9, 2022 Update
Action Is Required
The state-run CalSavers program was enacted in 2016 to provide employees an opportunity to build retirement savings and let employers avoid administrative fees and fiduciary responsibilities. An email outreach program launched towards the end of 2020, so many businesses have already received a notification to register for the CalSavers retirement plan program. In 2021, this requirement only applied to California employers with more than 50 employees, but effective in 2022, employers with more than 5 employees will be required to register.
The state’s popular California Competes Tax Credit program continues to be available during the 2019-2020 fiscal year. The state has allocated approximately $237 million to be awarded to both small and large business taxpayers. In June, the final award period of last fiscal year, approximately $55 million of tax credits were granted to twenty taxpayers. (more…)
UPDATED JULY 18, 2019: At Last…Partial Conformity…
In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA) which was the most significant tax reform legislation enacted since the 1980s. In July 2019, 18 months later, the California legislature acted and the governor signed Assembly Bill 91 that contained a select number of conformity provisions. These provisions will simplify tax compliance for California taxpayers as differing federal and California tax reporting for certain transactions will no longer be required. Unfortunately, California has yet to conform to most of the changes enacted by the TCJA.
The conformity changes included in AB 91 are highlighted below.
However, in an act of “reverse conformity,” the legislature passed Senate Bill 78. Originally, the federal Affordable Care Act imposed a “penalty tax” on taxpayers who did not have qualifying health insurance coverage. Congress repealed this “tax” effective January 1, 2019. But due to an act of reverse conformity, a “penalty tax” will once again be imposed on California taxpayers that do not have qualifying health insurance, effective January 1, 2020. (more…)
There have been a few developments since we last looked at cryptocurrency in April, 2017 (Are Bitcoin Users Cheating on Taxes? (Or Are They Just Confounded by the Rules?)). The IRS has increased tax compliance enforcement but unfortunately, guidance from the Internal Revenue Service has not kept up with the advances in the cryptocurrency world continuing tax reporting challenges.
In 2014 the IRS released their position regarding the taxation of cryptocurrency transactions in Notice 2014-21 (https://www.irs.gov/pub/irs-drop/n-14-21.pdf). The IRS notified taxpayers that: (more…)
In December, the Republican led Congress enacted the most wide ranging tax reform legislation since 1986. Provisions will impact both personal and business tax liabilities beginning in 2018. The legislation contains changes that can both help and hurt a contractor’s bottom line. Significant provisions include: (more…)
For many years San Jose required residential landlords with rentals within the city to pay an annual Business (License) Tax. A license was required if the landlord owned three or more residential rentals. In March, 2016 voters passed Measure G which “modernized” the city’s Business License rules effective July 1, 2017. The exception for property owners holding one or two residential rental properties was eliminated. As a result all taxpayer’s owning residential rental property within San Jose must register for and pay the $195 San Jose Business License Tax. Registration under measure G was required prior to September 30, 2017 but the City has extended the deadline until December 15th. The City will waive penalties and interest if property owners register and pay their Business License Tax prior to December 15th. Registration and payment can be made on-line at:
Measure G also increased the tax rates and maximum tax imposed on commercial landlords and mobile home park owners.
The issues related to proper worker classification impact many businesses, including contractors. The rules are often unclear and their application is based on each employer’s specific facts and circumstances. An Internal Revenue Service or California Employment Development Department audit resulting in the reclassification of workers can have a significant bottom line impact. As a result, it is important to correctly determine if your workers are employees or independent contractors. (more…)
Beginning next year several tax filing due dates will be changing. The existing filing schedule has been in place since I manually prepared tax returns with pencil and paper before the computer age began so these changes are significant. The new filing dates were established under the Protecting Americans from Tax Hikes (PATH) Act of 2015 without much publicity outside of the tax practitioner community. The new filing dates are effective for tax years beginning January 1, 2016, so taxpayers unaware of the new dates may have an unexpected surprise next year.
Fortunately, the traditional April 15th due date for individual tax returns has not changed but the due dates of business returns have been modified. The changes were implemented to help smooth the tax filing process for taxpayers owning interests in pass-through entities such as partnerships and S-Corporations. (more…)