IRS Releases New Employee Retention Tax Credit Guidance
Mar 28, 2025
Wait, we’re talking about the Employee Retention Tax Credit (ERC) yet again? Yes, you read it right, after hearing very little on the topic for the past 18 months, ERC is back in the news. On March 20, 2025, the IRS released new Employee Retention Tax Credit Guidance in an updated FAQ.
Specifically, the IRS introduced a new section entitled “Income Tax & ERC,” that addresses, one, situations where taxpayers didn’t reduce their claimed wage expense but received the ERC, and two, situations where taxpayers did reduce wage expenses but had a disallowed ERC claim. The tax authority also expanded guidance on reporting ERC fraud.
Here is what you need to know:
Income Tax & ERC
- The IRS stands by its original position that taxpayers should have reduced their deductible wage expense by the amount of allowed ERC in the tax year the qualified wages were paid or incurred. However, the IRS is now providing alternative solutions for claiming unreduced wages. Under the revised guidelines, taxpayers now have the option to report the overstated wage expense as gross income in the tax year when the Employee Retention Credit was received, rather than amending their previous returns. This marks a shift from the earlier policy.
- The updated FAQ also addresses scenarios where an ERC claim was denied after a taxpayer had already reduced their wage expenses for the year in which the qualified wages were paid. In these cases, taxpayers can now adjust their current return to reflect the increased wage expense corresponding to the disallowed ERC, instead of filing an amended tax return, an AAR, or a protective claim for refund for the earlier tax year. It’s important to note that taxpayers may still opt to amend previous returns to recapture the previously reduced wages.
ERC Scams
- The IRS has issued further guidance on the procedures for reporting ERC-related fraud, strongly urging taxpayers to report any suspicious activities, including illegal, tax-related activities involving ERC claims, individuals who promote improper and abusive tax schemes, and tax return preparers who deliberately prepare improper returns. The step-by-step process for reporting ERC fraud can be found in the “ERC Scam” section of the FAQ.
To read the full FAQ along with the updated guidance, please refer to the IRS website here. To better understand how this new guidance may impact your business, we encourage you to connect with our Employee Retention Tax Credit (ERC) lead, Mike Hanf.
Mike Hanf, Tax Partner – mike.hanf@wvco.com
Categories: Tax Compliance
UPDATED 3/3/205 – BOI Reporting Reinstated: Latest Legal Developments
Feb 20, 2025
UPDATE 3/3/2025: FinCEN Not Issuing Fines or Penalties in Connection with Beneficial Ownership Information Reporting Deadlines, read FINCEN’s release here!
On Monday, February 17, a federal district court judge in Texas lifted the suspension on the Corporate Transparency Act, reinstating the requirement to report beneficial ownership information.
In a recent announcement from the Financial Crimes Enforcement Network (FinCEN), the deadline for most companies to submit their reports has been extended to 30 calendar days from February 19, 2025, setting the new due date to March 21, 2025.
FinCEN also mentioned plans to review the beneficial ownership information reporting requirements under the Corporate Transparency Act. This review aims to reduce the reporting burden on low-risk entities while focusing enforcement efforts on threats that pose significant risks to U.S. national security. The criteria for identifying low-risk companies remain unclear, but this evaluation will occur over the next 30 days.
For general details on BOI Reporting being reinstated, please visit William Vaughan Company’s BOI Insights & Resource Hub. For comprehensive guidance, we encourage you to visit FINCEN’s website.
Categories: Tax Compliance
UPDATED 12/27/24 – BOI Reporting Requirements Reinstated – Earliest Filing Deadline Now January 13, 2025
Dec 27, 2024
UPDATE 12/27/2024: BOI Whiplash? Fifth Circuit Reverses Course, Blocks BOI Reporting in reversal decision, read the full NFIB article here!
On December 23, 2024, a federal court of appeals lifted the injunction on the Corporate Transparency Act (CTA). Effective immediately, the Act’s BOI reporting requirements are reinstated.
In response to the court’s ruling, FinCEN has recognized the need for additional time to comply, therefore granting a 12-day extension so that most BOI filings are now due by January 13, 2025.
FINCEN issued the following alert:
In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:
- Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
- Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
- As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.
For general information regarding the CTA and BOI reporting requirements being reinstated, please refer to William Vaughan Company’s BOI Insights & Resource Hub.
Categories: Tax Compliance
What the Recent Injunction Against the Corporate Transparency Act (CTA) Means for Your Business
Dec 05, 2024
On Tuesday, a federal court in Texas issued a nationwide injunction prohibiting the enforcement of the Corporate Transparency Act (CTA). The CTA, which was set to require an estimated 32.5 million companies in the U.S. to report sensitive information about their beneficial owners (BOI) to FinCEN by January 1, 2025, is now on hold due to constitutional concerns.
What Does This Mean for You?
The court’s decision means that companies are no longer obligated to meet the January 1, 2025, BOI reporting deadline or comply with related CTA requirements. While this provides immediate relief, the ruling is not necessarily final. The federal government is expected to appeal, and higher courts, including the Supreme Court, may weigh in.
For now, the CTA’s enforcement is paused. However, the broader legal battle is likely to continue, and the final outcome remains uncertain.
Our Recommendation
We advise clients to remain proactive:
- Continue Gathering Information: If your business falls under the CTA’s reporting requirements, we recommend you gather the necessary BOI information. Preparing now will help ensure compliance should the injunction be lifted or the requirements reinstated. Check out our BOI Insights & Resource Hub for details.
- Stay Informed: Legal and regulatory landscapes can shift quickly. We will continue to monitor developments closely and provide updates as the situation evolves.
- Be Ready to File: While enforcement is currently halted, the best course of action is to be prepared to submit your BOI report promptly if needed.
The implications of the Corporate Transparency Act injunction go beyond compliance and touch on broader concerns about federal authority and privacy. Rest assured, we are here to guide you through these changes and keep you informed. If you have questions or need assistance navigating these requirements, please get in touch with a member of our BOI reporting team at wvco.com/contact-us.
Categories: Tax Compliance
Moore v. United States: The Supreme Court’s Tax Dilemma
Dec 13, 2023
In the world of taxes, all eyes have been on the Supreme Court and the case of Moore v. United States. What makes this case so monumental, you ask? It’s not every day that the Supreme Court hears arguments around tax laws affecting individuals, much less a high-stakes case that could redefine the meaning of taxable income.
At the heart of Moore v. United States is a provision of the Tax Cuts & Jobs Act (TCJA) enacted in 2017, requiring companies to pay taxes on foreign profits that had previously been untaxed. This mandatory repatriation tax is now being called unconstitutional by one Washington state couple.
In 2005, Charles and Kathleen Moore invested $40,000 in KisanKraft, a farm equipment retailer based out of India. The couple alleges that they never received any foreign profit payments from the company because all such profits were reinvested by KisanKraft. The Moores argue that such “unrealized gains” are not actually income and therefore should not be taxed. Their case argues that the TCJA provision violates apportionment requirements under the 16th Amendment because it allegedly taxes them on ownership of personal property — in this case, their KisanKraft shares — rather than on realized or received income.
While the Moores are simply seeking a refund of the one-time $15,000 increase in their tax bill due to the change in the law, the case carries much broader implications. A ruling in their favor could threaten other provisions of the tax code. The Justice Department has also noted that a ruling by the Supreme Court invalidating the mandatory repatriation tax could cost the U.S. government $340 billion over the next decade. That amount could grow exponentially if the decision invalidates other tax provisions as well.
While a ruling is not expected until June of 2024, some justices have signaled the possibility of upholding the tax by attributing the income earned by the foreign company to its shareholders. William Vaughan Company’s tax team is closely monitoring updates in the Moore v. United States case. Be sure to subscribe to our insights as we continue to share any breaking news on the ruling.
Categories: Tax Compliance