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Over the years there has been significant concern about the illicit activities that are happening behind corporations. In 2020, discussions became more serious as they worked towards a method to create more transparency within corporations. In 2021, the Corporate Transparency Act was signed into law mandating certain corporations, LLCs, and similar entities to provide information about their beneficial owners to the Financial Crimes Enforcement Network.
This law impacts the majority of businesses in America and was implemented January 1, 2024 giving companies a deadline of January 1, 2025 to file initial reports. However, being such a new law, there has been fluidity as to the requirements with FinCEN posting updates on their website as changes occur. Tax attorneys in Arizona are staying up to date as well and can be essential resources for businesses during this time.
The most recent updates regarded the constitutionality of the requirements which caused an injunction. A short time later, a stay was put on the injunction reinstating the requirements. As of December 27th, the stay was removed and the injunction was put back into place pausing the requirements once again. The following blog is a breakdown of the most recent updates to the BOI requirements.
On December 3rd, the tax attorneys in Arizona from Silver Law paid close attention as the U.S. District Court for the Eastern District of Texas, issued an order granting a nationwide preliminary injunction, pausing the Corporate Transparency Act enforcement and subsequent requirements. This meant that anyone who had not filed their initial BOI report was temporarily not required to do so, although they could still choose to voluntarily.
The case that led to the injunction was brought on by a group of small businesses including Texas Top Cop Shop, Inc. This group argued that the requirements were unconstitutional, infringing on privacy rights and putting too heavy of a burden on small businesses.
This was not the first time that businesses have argued this point within district courts. In those cases, the ruling was quickly placed in favor of the Department of Treasury as the government as well as other district courts concluded the CTA is constitutional. Because of this, the Department of Justice filed a Notice of Appeal on behalf of the Department of Treasury, and also to grant a stay of the injunction while the appeal is pending. This happened December 5th.
TA couple weeks later, on December 23rd, a panel of the U.S. Court of Appeals for the Fifth Circuit granted the stay of the injunction, pending the outcome of the appeal. This stay meant that the requirements of the CTA were back in effect and must be completed by the deadline.
FinCEN, however, did take quick action, recognizing that reporting companies may need extra time to file their initial report due to the preliminary injunction. The initial due date was January 1, 2025 and was pushed to January 13, 2025. The tax attorneys in Scottsdale started up their hard work again ensuring businesses accurately complied with the requirements.
Just days later, on December 26th, a different panel of the U.S. Court of Appeals for the Fifth Circuit decided to remove the stay that was granted on the 23rd. The goal is to preserve the “constitutional status quo” during the pending appeal. It seems there is concern that the effects of continuing with the stay could be difficult to reverse if the CTA is determined to be unconstitutional in the end. It also seems that the court considered the following:
What does this mean for tax attorneys in Arizona and their clients? If you have not filed your beneficial ownership information, the deadline is currently on hold. You are not required to file and are not liable during the injunction, though you may file voluntarily if you so choose. It is expected that a decision will be reached in early 2025.
If the panel determines that the injunction is not necessary and removes it, it is likely FinCEN will require BOIs by January 13 or a later date determined once everything is settled. For now, it is most helpful to stay up-to-date on the FinCEN alerts and to stay in continual communication with your tax attorneys in Arizona.
Let our tax attorneys in Scottsdale take some things off your plate and ensure you comply with the latest government requirements. If you’re facing a legal matter or considering a lawsuit, set up a consultation where we will walk you through your options. When you hire us at Silver Law, you can be confident that your rights and interests will be protected every step of the way.
Contact us today and enjoy peace of mind knowing we have your back.
Email: lchapman@silverlawplc.com
Website: taxcontroversy.com
Arizona Location
7033 E. Greenway Pkwy, Ste 200
Scottsdale, AZ 85254
Office:480-429-3360
Nevada Location
410 South Rampart Blvd, Suite 390
Las Vegas, Nevada 89145
Office: 702-726-6819
Henderson Location
2470 Saint Rose Parkway Suite
207 Henderson, NV 89074
San Diego Location
1373 Grand Avenue,
San Diego, CA 92109
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