Federal Tax News for Businesses: April 2024

A Report to Help Prevent and Detect Money Laundering

businessman sitting at his desk thinking about a problem

Officials from the Financial Crimes Enforcement Network (FinCEN) recently defended the rollout of Beneficial Ownership Information (BOI) reporting before a U.S. House committee. To comply with an initiative aimed at helping to prevent and detect money laundering, as many as 32 million companies are expected to file BOI reports.

The reporting is not without critics. Some House members and the American Institute of CPAs have questioned the burden on small businesses and advocate a slower rollout of BOI requirements. FinCEN director Andrea Gacki testified that her group isn't "out to take 'gotcha' enforcement actions." And to help companies, FinCEN has released a Small Entity Compliance Guide. Click here to view it.

Guidance for Emergency Savings Accounts

in case of emergency break glass for money

Employers may now offer their workers the option of funding a pension-linked emergency savings account (PLESA). IRS notice 2024-22 provides anti-abuse guidance to employers, which are intended to prevent participants from manipulating rules to cause excessive matching contributions.

According to the IRS guidance, a reasonable policy balances PLESA participants' interests with the plan sponsor's interest in preventing such manipulation. On the other hand, it's generally unreasonable to forfeit contributions already made, suspend a participant's PLESA use because of a withdrawal or suspend matching contributions to an underlying retirement savings account. Click here for more information.

New Depreciation Limits for Certain Business Vehicles

row of cars in parking lot

Recent IRS guidance provides the 2024 depreciation limits for "luxury" business vehicles. For vehicles placed in service in 2024, depreciation limits are $20,400 for year one, $19,800 for year two, $11,900 for year three and $7,160 for each year after that. This includes passenger cars, SUVs, trucks and vans. The IRS also announced lease inclusion amounts for lessees of passenger vehicles first leased in 2024. Click here to read Rev. Proc. 2024-13.

Follow the Tax Rules to Limit Tax Trouble

follow the rules

Most taxpayers prefer to avoid tax trouble, and they can generally do that by following the tax rules. One taxpayer was the sole shareholder of a limited liability company (LLC) when the IRS assessed a harsh penalty for the LLC's unpaid tax.

The taxpayer sought a refund, claiming that the penalty was assessed outside the statute of limitations. The IRS noted that the statute of limitations hadn't been triggered, because she failed to file Form 944, Employer's Annual Federal Tax Return. Instead, she filed forms that she said had enough data to calculate her company's tax bill. However, the IRS had expressly rejected because they were incorrect for LLCs. For this and other reasons, the U.S. Tax Court denied her refund. (Lagerkvist, U.S. District Court, 2/29/24)

A Credit to Incentivize Manufacturers

computer chip in the form of the American flag on a circuit board

The IRS has issued final regulations for manufacturers eligible to make the elective payment election of the advanced manufacturing investment tax credit. This credit was created in 2022 by the CHIPS Act. The intent of the credit is to incentivize companies to make semiconductors and semiconductor equipment in the United States.

The final regulations describe procedures for making the elective payment election, particularly by partnerships and S corporations. They also address excessive payments and basis reduction and recapture. Taxpayers wanting to make the election must first follow the IRS's pre-filing registration process and receive a registration number. Contact us for assistance.

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