Henderson, Franklin, Starnes & Holt, P.A.

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On January 1, 2021, Congress enacted the Corporate Transparency Act (the “CTA”) as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021. Congress passed this as an attempt to better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity.

The CTA requires a range of entities to file a report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) identifying the entities’ beneficial owners – the persons who ultimately own or control the company – and provide similar identifying information about the persons who formed the entity. The reporting rule goes into effect on January 1, 2024.

Who is Required to Report?

Any entity that is a corporation, a limited liability company (“LLC”), or any entity created by filing with a Secretary of State or any similar office under the law of a State or Indian tribe will be required to comply with the CTA. In addition, any corporation, LLC, or other entity that is formed under the laws of a foreign country and is registered to do business in any State or tribal jurisdiction is also subject to the CTA.

Accordingly, the rule requires the following types of entities to file reports unless it falls within an exemption (each, a “Reporting Company”):

  • U.S. corporations;
  • U.S. LLCs;
  • Other similar U.S. entities, such as limited partnerships and business trusts/statutory trusts; and
  • Non-U.S. corporations, LLCs and other similar entities that are registered to do business in the United States.

Are There Any Exemptions?

Continue Reading What Business Owners Need to Know About the Corporate Transparency Act

tax cut The short answer is “yes.” On October 18, 2022, the Internal Revenue Service (the “IRS”) issued Revenue Procedure 2022-38 (the “Procedure”). This Procedure adjusted certain dollar amounts related to tax items due to inflation. What you may not know is that certain dollar amounts contained in the tax code are subject to inflation. This means the IRS will adjust these items on a yearly basis to take into account inflation.

As we all know, inflation has hit an all-time high this year, and costs continue to rise with no end in sight. However, one piece of good news is that the Procedure adjusts the individual tax brackets and many more items for the 2023 tax year to take into account this inflation. This means there is a possibility that you may see a slightly larger refund or slightly less amount due when you file your 2023 tax return.

The Standard Deduction

The standard deduction for a married couple filing jointly increased to $27,000, which is up $1,800 from the previous year.

For single taxpayers and married individuals filing separately, the standard deduction increased to $13,850, which is up $900.00.

For head of households, the standard deduction will be $20,800, which is up $1,400 from last year.

The Individual Tax Brackets

Continue Reading Did inflation just save me money on my taxes?

IRSAs you may recall from our previous post, Hurricane Ian extended certain due dates with respect to tax returns for those affected. There is also relief for certain taxpayers who have an ongoing Section 1031 Exchange. Under the Revenue Procedure 2018-58 (“Rev. Proc. 2018-58”), two sections grant relief to taxpayers involved in a Section 1031 Exchange and who are Affected Taxpayers.

Section 6 Relief

Section 6 of Rev. Proc. 2018-58 (“Section 6 Relief”) states that if a taxpayer has a deadline (the 45-day or 180-day deadline) that falls between the Relief Period prescribed by the Internal Revenue Service (the “IRS”), the taxpayer may extend that deadline date to the end of the Relief Period.

Calculating the Relief Period

Let’s unpack this; the Relief Period is September 23, 2022 through February 15, 2023 as stated in the IRS’s notice FL-2022-19, dated September 29, 2022 and updated on October 5, 2022. Therefore, if the 45-day or 180-day deadlines fall between the Relief Period, the taxpayer may extend such deadline to February 15, 2023. An Affected Taxpayer includes individuals who live, and businesses (including tax-exempt organizations) whose principal place of business is located, in the state of Florida.

For example:

Facts: Taxpayer has its principal place of business in Lee County, Florida and is therefore classified as an Affected Taxpayer. Taxpayer relinquished their property on June 15, 2022, the 45-day deadline ends July 30, 2022 and the 180-day deadline ends December 12, 2022.

Analysis: The 45-day deadline does not fall between the Relief Period and, therefore, cannot be extended. However, the 180-day deadline does fall between the Relief Period and can be extended until February 15, 2023.

Section 17 Relief

The other section that provides relief in Rev. Proc 2018-58 is Section 17. Section 17 states that if the relinquished property was transferred or parked on or before the date of the disaster, the 45-day and 180-day deadlines that have not yet lapsed, may be extended 120-days from the last day of such deadline or to the last day of the Relief Period, whichever is later (“Section 17 Relief”).Continue Reading Did Hurricane Ian extend deadlines with my Section 1031 Exchange?

Tax TimeWelcome to 2022 tax season! As the vast majority of businesses, small and large, were affected by the COVID-19 pandemic, many companies received support through the Paycheck Protection Program. However, there were many question marks with the Paycheck Protection Program, such as the timing of forgiveness and if eligible expenses are deductible for federal income tax purposes.

Timing of PPP loan forgiveness

As we all know, the Paycheck Protection Program (“PPP”) was created to assist businesses in paying their employees’ paychecks. If the funds received from PPP were used for qualified expenses, the amount of the loan was forgiven. Recently, the IRS released guidance on the timing of PPP Loan forgiveness. With some business owners not receiving their forgiveness letter in 2021, the question arose when the PPP loan will be forgiven for tax-exempt income purposes.

The IRS stated that taxpayers may treat such income as received or accrued when either:

  • expenses eligible for forgiveness are paid or incurred;
  • an application for PPP loan forgiveness is filed; or
  • PPP loan forgiveness is granted.

Thus, a taxpayer who submitted their application for forgiveness in 2021, but has not been granted forgiveness in the 2021 tax year, may choose the date of the forgiveness application, the date the forgiveness is granted, or the when eligible expenses are paid or incurred.

Expenses paid with 2020 PPP loans

Continue Reading How does receiving a PPP Loan impact filing my company’s taxes?

new businessWhat if I were to tell you, you could be both an LLC and an S-corporation and still be considered one single business entity?

An S-corporation is not a state law entity designation, similar to a Florida corporation or a Florida limited liability company. However, an S-corporation is merely a federal income tax classification made on a specific Internal Revenue Service form (Form 2553). Thus, one can form a Florida limited liability company (“LLC”) and elect to be an S-corporation for federal income tax purposes with the Internal Revenue Service (“IRS”).

Who is eligible to make the election?

Generally, the entity wishing to make the election needs to be a domestic corporation or an LLC. However, certain types of businesses are ineligible to make the election, such as insurance companies or financial institutions. In addition, the entity must have eligible shareholders, meaning the owners of the entity must meet specific requirements of the Tax Code.

Who can be an eligible shareholder?

shareholderAn eligible shareholder can be an individual (other than non-resident alien), estates, certain trusts, certain qualified retirement trusts, or charitable organizations. More specifically:

  • So long as the individual is not a non-resident alien, individuals are eligible S-corporation shareholders. Individuals may co-own an S-corporation with other individuals, such as husband and wife, as joint tenants by the entirety.
  • If an individual shareholder declares bankruptcy, the bankruptcy estate is a permissible S-corporation shareholder. If an individual shareholder passes away, their estate is an eligible S-corporation shareholder, as well.
  • Testamentary Trusts. These trusts become effective upon the death of a shareholder and hence become eligible to be an S-corporation shareholder.
  • Voting Trusts. Shareholders may create these trusts to temporarily transfer their shares to the trustee to combine their voting power. Voting trusts are eligible to be S-corporation shareholders.
  • Qualified Subchapter S Trust (“QSST”). A QSST is an eligible S-Corporation shareholder if it meets specific rigid requirements.
  • Small Business Trust (“ESBT”). An ESBT is a trust for beneficiaries that are all eligible s-corporation shareholders that acquired their trust interest by lifetime gifts or upon the death of an owner. These are more flexible trusts than the QSST described above.

Coming back to the opening question of an LLC or an S-corporation, so long as the individuals forming the LLC are eligible shareholders described above, the LLC can make the election treated as an S-corporation.

When to make the election?

Continue Reading Should I start my new business as an LLC or S-Corporation?

Vaccine PassportAt the start of summer, Governor Ron DeSantis declared that Florida is “no longer in a state of emergency.” This statement preceded a bill banning vaccine passports, and two executive orders suspending local government COVID-19 restrictions.

For employers, this doesn’t mean you should rush to discard your face marks requirement, nor should it impact your decision to mandate vaccines. Employers remain free to implement safety features they feel needed.

New York vs. Florida

Many Northeastern states have begun experimenting with COVID passports. For instance, New York City now requires at least one dose of a COVID-19 vaccine for entry to indoor dining, gyms, and entertainment performances. For better or worse, Florida has gone in the opposite direction. Florida law now prohibits businesses from implementing these measures with respect to customers. Specifically, the new law says that “business entities,” including for-profit and not-for-profit entities, cannot require that patrons or customers provide documentation certifying that they received the COVID-19 vaccine or certifying that they have recovered from the virus to enter or receive a service from the business.

EEOC’s View

Continue Reading What Florida employers need to know about the vaccine passport ban

Launching your own business is a huge decision, one not to take lightly. From developing your product or service and getting funding to taking measures to protect your business, entrepreneurs must do their homework. As a business and tax attorney, one question I often hear is:

What is the best way to set up a new business?”

While the answer varies depending on the goals of each client, an LLC is often chosen.

What is an LLC?

An LLC, or limited liability company, is a U.S. business structure that combines the simplicity, flexibility, and tax advantages of a partnership with the personal liability protection of a corporation. The owners of LLCs are called members. An LLC can have one or many members. Members can be individuals or other businesses, and there is no limit to the number of members an LLC can have. With an LLC structure, members’ personal assets are protected from the LLC’s creditors. LLCs are more cost effective and simpler to form than a corporation. This, in addition to the discussion below, has led to LLCs becoming the ‘go-to’ business structure to form.

Who should form an LLC?

Continue Reading What is an LLC and why do I need one?

Wine GlassesOn May 13, 2021, Florida Governor Ron DeSantis signed into law Senate Bill 148, which allows restaurants or other alcohol beverage vendors to sell alcoholic drinks to-go.  No, this does not mean that Florida is an open container state; possession of an open alcoholic container in Florida is still illegal under Florida Statutes, section 316.1936 and 856.011. However, customers who want to order take-out from their favorite restaurant can now also bring home their favorite cocktail, providing the restaurant meets certain requirements.

The alcoholic drinks to-go initially started through one of DeSantis’s emergency orders as a way for struggling restaurants during the COVID-19 pandemic to increase their sales. “Alcoholic drinks to-go became an important source of revenue for restaurants that were trying to survive during the pandemic,” DeSantis noted. Throughout the pandemic, restaurants were some of Florida’s businesses that were most affected. Florida Representative Josie Tomkow stated, however, that the new law

allows for restaurants to continue to offer alcohol-to-go as an option. This pro-consumer, business-friendly bill will help support our restaurant industry and its tens of thousands of employees.”

Requirements

Continue Reading I’ll Take it To-Go: New Florida Law Makes To-Go Alcohol Sales Permanent Effective July 1

COVID-19 vaccineOn June 12, 2021, a federal judge entered an Order dismissing a hospital employee’s lawsuit attempting to block a hospital policy requiring employees to receive a COVID-19 vaccine. Houston Methodist Hospital announced a policy on April 1, 2021, mandating that all employees receive one of the COVID-19 vaccines. The hospital eventually suspended 178 employees without pay for their refusal to get vaccinated. Jessica Bridges, along with 116 other hospital employees, brought suit to block the vaccine requirement and to overturn their suspensions and possible terminations.

At the beginning of 2021, there was much speculation throughout the country regarding whether or not employers could require employees to receive a COVID-19 vaccine. In a previous article, Can Employers Require Employees to Receive the COVID-19 Vaccine?, I indicated that the answer appeared to be yes, with some exceptions. Now U.S. District Judge Lynn N. Hughes appears to have confirmed this through his dismissal of Bridge’s lawsuit.

Plaintiff’s argument opposing COVID-19 vaccine

Continue Reading Federal judge upholds employer’s COVID-19 vaccine requirement

Governor Ron Desantis issued an executive order prohibiting COVID-19 “vaccine passports” in Florida. The order prevents government entities from issuing “vaccine passports” or other standardized documentation for the purpose of certifying an individual’s COVID-19 vaccine status to a third party.

How does this order impact Florida business owners?

Further, this order prohibits businesses in Florida from requiring patrons to provide documentation certifying that the individual had a COVID-19 vaccination. Businesses still, however, can employ COVID-19 screening protocols and measures, such as requiring the use of a mask.Continue Reading No COVID-19 “Vaccine Passports” for Florida