Beneficial Ownership Information (BOI) Reporting Requirements

Oct 23, 2023

What is BOI Reporting?
Beneficial Ownership Information (BOI) Reporting is a framework developed by the Financial Crimes Enforcement Network (FinCEN) that mandates certain businesses to disclose specific information about their “beneficial owners.” The new reporting guidelines were formed as an effort to enhance financial transparency and curtail illicit financial activities by illuminating the individuals who own or control certain foreign or domestic entities registered to do business within the U.S.

Who is Required to Report Beneficial Ownership Information?
Domestic companies required to report include corporations, LLCs, and other similar entities formed through the registration with a secretary of state or similar office. Certain entities, such as large companies with over 20 million dollars in revenue, those that employ more than 500 full-time employees, and entities that operate under extensive regulatory scrutiny, among others, may be exempt from BOI reporting. In total, there are 23 types of entities exempt from reporting requirements, making it extremely important to carefully review FinCEN’s qualifying criteria, (published in their Small Entity Compliance Guide,) before concluding that your company is exempt.

Key Reporting Elements Defined

  • Beneficial Owner(s): the FinCEN defines Beneficial Owners as individuals who own or control (either directly or indirectly,) at least 25% of the ownership interest in a reporting company, or hold “substantial control” over the company.
  • Substantial Control: according to the FinCEN, an individual holds substantial control over a reporting company if the individual meets any of four general criteria:
    • The individual is a senior officer;
    • The individual has authority to appoint or remove certain officers or a majority of directors of the reporting company;
    • The individual is an important decision-maker; or
    • The individual has any other form of substantial control over the reporting company.
  • Required Reporting Information: includes the name, date of birth, address, and an identifying number (e.g., a driver’s license or passport number) of each beneficial owner, as defined above.
    Reporting Timelines
  • Existing Entities: Business that were formed as of January 1, 2024, must submit an initial BOI report by January 1, 2025.
  • New Entities: Those businesses created or registered after January 1, 2024, must report within 30 days of creation/registration.
  • Updates: Any changes or updates to a business’s BOI structure must be reported within 30 days of occurrence.

How to Report Beneficial Ownership Information
BOI reports must be submitted electronically through FinCEN’s secure, online filing system, which will be accessible starting January 1, 2024. FinCEN is currently not accepting any beneficial ownership information reports.

Next Steps

  • Identify and verify Beneficial Owners: Ensure you have accurate, verifiable information for all individuals who hold a significant interest or control in your company.
  • Understand your reporting obligations: Dive into the specifics of what information needs to be reported and acquaint yourself with the reporting formats and guidelines included in the Small Entity Compliance Guide linked above.
  • Engage Professional Assistance: Consider connecting with WVC’s team of tax advisors who continue to remain on top of BOI reporting mandates to ensure accurate and timely filing.
  • Stay Informed: Sign up for WVC Insights to receive regular updates and additional guidance on BOI reporting guidelines to ensure your business maintains continuous compliance.

Concluding Thoughts
Complying with BOI reporting requires businesses to exercise diligence in maintaining accurate records, understand the mechanics of the reporting framework, and exhibit punctuality in submissions. Strategic partnerships with professional experts can help pave the way for seamless compliance and fortified financial transparency.

Ensuring that your business is well-prepared to successfully navigate both BOI reporting mandates and other critical tax updates is William Vaughan Company’s top priority. Connect with a trusted WVC tax advisor today to see if your business qualifies to report on Beneficial Ownership Information under the updated framework.


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Categories: Tax Compliance

IRS’s 2024 E-Filing Mandate: What You Need to Know

Oct 04, 2023

Earlier this year, the Internal Revenue Service (IRS) finalized regulations mandating the electronic filing of the majority of tax and information returns in a strategic bid to curtail the influx of paper returns.

What has changed?

Starting January 1, 2024, companies filing 10 or more returns of any type per calendar year, must now submit these returns electronically instead of paper filing. This new regular significantly reduces the prior 250-return threshold.

Filers are now required to aggregate almost all information return types covered by the regulation to determine whether they meet the 10-return threshold. Below are just some of the forms impacted by the new requirement, most notably, Form W-2 and Form 1099:

  • Corporate income tax returns
  • Unrelated business income tax returns
  • Withholding tax returns
  • Certain information returns (W-2, 1099)
  • Registration statements
  • Disclosure statements
  • Notifications
  • Actuarial reports and certain excise tax returns

For a complete list of forms that must be aggregated, visit the IRS site.

Other noteworthy considerations:

  • If a taxpayer is filing an amended return, the amended return must be filed using the same method as the original return.
  • In limited circumstances, the IRS does not support e-filing. For example, the IRS does not support electronic filing of a final Form 941. Therefore, paper filings will be accepted if an employer is required to file a final Form 941.
  • Partnerships with more than 100 partners at any time during the year must e-file.
  • The IRS released a new, free e-file portal, Information Returns Intake System (IRIS), for the 1099 series of informational returns. Though available to any business of any size, IRIS may be especially helpful to any small business that currently sends their 1099 forms on paper to the IRS.
  • Exemptions and waivers are available in limited situations. Exemptions will be allowed for members of certain religious communities that prohibit technology use.
  • Failure to meet these new e-filing regulations could result in one or more penalties.

How do I know if I am impacted?

The aggregation rule combines all previously mentioned form types to determine if the filer meets the 10-return threshold. For example, the amount of W-2 forms will be combined with the number of 1099 forms a company is required to file. If that amount is 10 or more, then that company has to electronically file all of the forms.

Next steps

Any taxpayers currently filing paper returns should consult with their William Vaughan Company tax advisor to determine if the new 2024 e-filing mandate requirements apply to them based on the number of returns that they anticipate filing in 2024 for tax year 2023. More details about these changes can be found on the IRS website, here.

Categories: Tax Compliance

Should I Cancel My Ohio CAT Account?

Sep 26, 2023

Commercial Activity Tax Changes Under Ohio House Bill 33

We recently covered the changes to Ohio’s tax codes that were enacted by Ohio House Bill 33 after it’s passage into law in July of 2023. The new law introduced several changes to state tax codes that could prove advantageous for Ohio business owners. One of the more significant changes to the tax law relates to how CAT is reported.

The CAT is calculated using a business’s taxable gross receipts. As a result of the passing bill, beginning January 1, 2024, the CAT annual minimum tax will be eliminated, and the exemption amounts for businesses will be significantly increased. Under the new law, the CAT rate of .26% will stay the same, but will now only affect taxpayers with gross receipts over $3 million in 2024, (that number will increase to $6 million in 2025).

Taxpayer Implications
Businesses currently reporting under $1 million in gross receipts, and that are predicted to have less than $3 million in gross receipts in 2024, should cancel their CAT account effective December 31, 2023, and file a final annual CAT return, due May 10, 2024. Once the final CAT return is filed, taxpayers with gross receipts under the exemption amount will no longer have to file an annual CAT return in subsequent years. Taxpayers that predict they will have annual gross receipts between $3 million and $6 million should file their final CAT return the following year, 2025. All remaining CAT payers that do not meet the exclusion amount must still file quarterly returns for tax periods after January 1, 2024.

If a taxpayer does not cancel their CAT account, they will still be required to file a CAT return until the account is canceled, even if nothing is due. Taxpayers may cancel their CAT account by visiting the CAT Cancel Account Transaction on the Ohio Department of Taxation’s Business Gateway (preferred method.) Alternatively, those wishing to cancel their CAT account can also complete and submit a “Business Account Update Form” available in the “Tax Forms” section of the Ohio Department of Taxation’s website.

If a business’s gross receipts happen to exceed the exclusion amount in subsequent periods, the taxpayer must reactivate their CAT account and resume filing returns and paying the Commercial Activity Tax at that time.

Conclusion
Ohio House Bill 33 has made several alterations to Ohio’s tax laws, with the regulations around Commercial Activity Tax being particularly affected. For more information on these changes, visit the official release from the Ohio Department of Taxation.

William Vaughan Company will continue to monitor the changes resulting from this bill as well as other state and federal tax bills.

Questions or concerns about how these changes apply to your specific CAT filings? Connect with us today to get a better understanding of these new developments and mitigate tax risks in your business.

Categories: Tax Compliance

Bonus Depreciation Phase-Out

May 24, 2022

Properly qualifying assets for bonus depreciation can have a significant impact on a business’s bottom line. If an asset qualifies as long-term business property under tax rules, bonus depreciation may allow a business owner to deduct the entire cost of that asset in the year of acquisition.

This will be the last year for 100% bonus depreciation as enacted by Tax Cuts and Jobs Act (TCJA). Starting in 2023, bonus depreciation is scheduled to drop to 80% and will continue to drop by 20% each year thereafter until finally there will be no bonus depreciation starting in 2027.

Prior to the enacting of bonus depreciation, the premier tool for businesses to expense asset purchases was Section 179. Section 179 is still scheduled to be fully available and the current amount of Section 179 deduction allowed is $1,080,000 and the phase-out of the deduction starts once you place eligible assets into service of $2,700,000 and no Section 179 deduction is allowed after $3,780,000 of assets placed in service for that year. Unlike bonus depreciation, Section 179 deductions are only allowed to the extent of taxable income.

Although tax incentives like Section 179 and bonus depreciation can be beneficial, these provisions should only be used in situations that make long-term financial sense for your operation. It is important to always consider your tax circumstances and cash-flow requirements when using these tools. Connect with your William Vaughan Company advisor with additional questions.

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Categories: Tax Compliance, Tax Planning

Michigan Grant Money Now Available Through Grow MI Business Funds

Mar 15, 2022


What is Grow MI Business?
Grow MI Business is a grant program launched by the state of Michigan to deliver roughly $409 million of support to eligible businesses across the state impacted by COVID. The program, signed into law at the end of last year, allows companies who were open for business before October 1, 2019, to get back a percentage of their loss in total state sales through a grant of up to $5 million.

Who qualifies?
Qualifying businesses must meet the following criteria, as noted on the program website:

  • Businesses with a decline in total Michigan sales between the calendar year 2019 and 2020 equal to or greater than 5 percent.
  • Businesses that are not tax-exempt
  • Businesses not classified as a government entity
  • Must fall under one of the following qualifying business type categories:
    • Entertainment Venue, including auditoriums, arenas, banquet halls, cinemas, concert halls, conference centers, performance venues, sporting venues, stadiums, and theaters;
    • Recreational Facility or Place of Amusement, including amusement parks, arcades, bingo halls, bowling alleys, casinos, nightclubs, skating rinks, water parks, and trampoline parks;
    • Cosmetology or Barber Services;
    • Exercise Facility or Gym;
    • Food Service Establishment;
    • Nursery Dealer or Grower;
    • Athletic Trainer;
    • Body Art Facility; or
    • Hotel or Bed & Breakfast

How do I apply?
Online applications are available now through March 31, 2022 (11:59 p.m. EST). You can find additional information along with the application on the Apply for Business Resources (ABR) website, here.

Applicants will be required to submit documentation to verify financial hardship including:

  • Financial Documentation and Information to verify their decline in Michigan total sales from the calendar year 2019 to the calendar year 2020 for businesses in operation on October 1, 2019.
  • Financial Documentation and Information to verify their fixed costs for the calendar year 2020 for businesses that were not in operation on October 1, 2019, but started before June 1, 2020.
  • Beneficiary Agreement with terms and conditions that have been electronically signed.

Please note, unlike other COVID-based funding programs, Grow MI Business is NOT a first-come, first-serve program. Instead, it may be prorated depending on the number of eligible businesses that apply.

Next steps.
For more information on eligibility, requirements, and award methodology, please visit Michigan.gov/abr.
Your William Vaughan Company advisor can guide you through the process and help you provide the necessary information to qualify.

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Categories: COVID-19

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