Updates - New Information

Beneficial Ownership Information (BOI) Reporting

In 2021, Congress passed the Corporate Transparency Act; it became effective on January 1, 2024. It is a small business reporting requirement with potential penalties for not reporting. (Exemption for large companies - more than 20 full time employees and more than $5 million in revenues on prior year return.) You will be required to register your business entity with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury.

FinCEN is not working in conjunction with the IRS and this is not a tax matter. Rather, this is a comprehensive effort by FinCEN to root out and cut down on the use of small business entities for purposes of money laundering, terrorist financing, and other illegal activities.

Additional information is available on Financial Crimes Enforcement Network’s website:

U.S. Beneficial Ownership Information Registry Now Accepting Reports | FinCEN.gov

To complete your BOI reporting requirement, please visit FinCEN’s BOI Reporting website: https://www.fincen.gov/boi

If your business is an LLC or corporation, including a single member LLC, you must fill out this form by the end of 2024, and if you start a new business in 2024, you must report within 90 days of formation. Reporting is done with a special electronic filing with the Treasury Department’s Financial Crimes Enforcement Network (Not the IRS). The required information includes owners and, for new businesses formed in 2024, the company applicants. To clarify, even if you have set up an LLC just to own a rental property this form is required, and a separate filing and form is required for every single entity, whether an LLC, an S corporation, or a C Corporation. 

Initial Reporting:

• New companies formed after 1/1/2014 have to report within 90 days of formation
• Existing companies formed before 1/1/2014 have to report by 1/1/2025

Updates:

• Changes in beneficial ownership, name or address change must be report within 30 days

Annual Reporting:

• No annual reporting

At the present time there are NO extensions available.

Needed For the Company or Entity:

1.  Full legal name according to the Secretary of State ( a “good standing” verified),

2. Any trade and “doing business as” names,

3. A complete current street address of the principal place of business (A P.O. Box or the address of a 3rd party agent does not comply with this requirement)

4. The state of formation,

5. The IRS Taxpayer Identification Number .

A change of any of these 5 items at any time must also be reported within 30 days to the Financial Crimes Enforcement Network, including an address or owner change.

Needed For the Owners and Applicants:

For each owner of at least 25% of the entity (directly or indirectly), the reporting must include for each owner:

1. Legal name and date of birth,

2. Address,

3. Unique identifying number and the issuing jurisdiction from one of the following documents: (i) a non-expired passport issued to the individual by the United States government, (ii) or a non-expired identification document issued to the individual by a State, local government, or Indian tribe for the purpose of identifying the individual, (iii)or a non-expired driver’s license issued to the individual by a State, or (iv) a non-expired passport issued by a foreign government to the individual, if the individual does not possess any of the other documents described, and

4. An image of the document from which the unique identifying number (above #4) was obtained. Additionally, the rule requires that reporting companies created after January 1, 2024, provide the four pieces of information and document image for company applicants. 

MarylandSaves Has Launched Statewide

Calling all small businesses in Maryland! Did you know that in the state of Maryland there are nearly one million private-sector employees that do not have access to an employer-sponsored retirement savings program? Well, that is about to change as we have great news! 

Key Points to Know:

• All employers that participate in MarylandSaves or offer their employees another qualified retirement program will be eligible to receive a waiver of their $300.00 SDAT Annual Report Filing Fee.
• To receive the waiver for 2023, employers need to register with MarylandSaves by December 1, 2022, or certify that they offer another qualifying retirement program.
• Please visit the following links for more information:

https://marylandsaves.zendesk.com/hc/en-us/articles/6165597504023-Certify-Your-Business-Exemption-From-MarylandSaves

https://marylandsaves.zendesk.com/hc/en-us/articles/5562261927447-An-Overview-Welcome-To-Onboarding

https://marylandsaves.zendesk.com/hc/en-us

ERC Fraud Alert

The Employee Retention Tax Credit (“ERC”) was introduced as part of the CARES Act, it was intended to encourage employers to keep employees on the payroll as they navigated the effects of COVID-19. Since its inception, the rules around eligibility have changed several times and have also been widely misinterpreted.

Some third-party firms performing calculations for taxpayers are taking very aggressive positions on ERC. They are charging a percentage of the credit for the fee and making claims about eligibility that could be incorrect. Due to the limited IRS guidance, they have a very liberal interpretation of the rules.  For example, supply chain disruptions as a qualification of ERC. As a result, some taxpayers are claiming this refundable credit when they do not actually qualify because their business was not shut down due to a government order, or they did not have a significant decline in gross receipts (2020 - more than 50%; 2021 – more than 20%). 

The IRS has stated ERC is a major area of focus for enforcement. The statute of limitation for the IRS to audit the ERC claims is 5 years.

WHS will evaluate your eligibility for the ERC and help you take advantage of it. We have partnered with Payroll Services, LLC to file the reports necessary to claim the credit. 

IRS Lowers Electronic Filing Threshold to 10 Information Returns of any type

It's official—the IRS now requires employers to electronically file the following forms if they have a combination of 10 or more of:

• W-2
• 1099 series
• 1098 series
• W-2G
• 1042-S
• 1094
• 1095 Series
• 3921
• 3922
• 8027

The new threshold is effective for information returns required to be filed in calendar years beginning with 2024. The new rules apply to tax year 2023 Forms W-2 and 1099’s because they are required to be filed by January 31, 2024.

Specifically, the final regulations require filers to combine almost all information return types covered by the regulation to determine whether a filer meets the 10-return threshold and is required to e-file their information returns. Earlier regulations applied the 250-return threshold separately to each type of information return covered by the regulations.

WHS, LLC has the software to file the W2’s and 1099’s electronically to meet the IRS requirements. Your information can be submitted to WHS as in past years except if you are using QuickBooks Desktop or QuickBooks Online. We can export data from these programs with some formatting. Contact Cindy Harbaugh prior to November 1stif you are using QuickBooks Desktop or QuickBooks Online and plan to use WHS to file your W2’s and 1099’s. 

If you want to file your own W2’s and 1099’s, and you have 10 or more combined forms, you will need to register for accounts as follows:

• Almost all federal e-filing now requires the user to login under the “ID.me” system. If you are not already enrolled in ID.me you will need to get an account. IRS migrates e-Services login to ID.me.
• To electronically file 1099’s, the IRS recommends obtaining a FIRE Transmitter Control Code (TCC) by November 1st as the process may take 45 days.
• To electronically file W2’s, BSO registration takes longer than in previous years. After Registering on BSO and requesting “SSA Services Suite for Employers” (under “Request New Services”), it can take up to 2 weeks for BSO to mail activation code to the employer.
• New for 2023 – IRS Information Return Intake System (IRIS) for filing 1099’s. This system requires a separate TCC from the FIRE TCC.
• Corrected returns must be filed in the same manner as the Original Return

Please be advised that if you choose to file your own W2’s and 1099’s, WHS is not able to provide consultation or assistance with the registration process. You will need to work directly with the government to resolve any issues encountered during the registration process. WHS is not able to intervene on your behalf. 

The IRS has the authority to penalize any employer who does not file electronically if they meet the threshold.

MD Electronic Filing Requirements for W-2 Forms

• It is mandatory to file all W2's electronically by January 31st.

PA Electronic Filing Requirement for W-2 Forms

• The REV-1667 must be filed by January 31st. Copies of the individual wage withholding statement (W-2) must also be filed electronically with the form. 

WASHINGTON — The Internal Revenue Service has awarded new contracts to three private-sector collection agencies for collection of overdue tax debts. The new contracts begin Thursday following today’s expiration of the old contracts.

Beginning Thursday, Sept. 23, 2021, taxpayers with unpaid tax bills may be contacted by one of the following three agencies:

• CBE Group, Inc.: PO Box 2217, Waterloo, IA 50704. 800-910-5837
• Coast Professional, Inc.: PO Box 526, Albion, NY 14411. 888-928-0510
• ConServe: PO Box 307, Fairport, NY 14450. 844-853-4875

The IRS will always notify a taxpayer before transferring their account to a private collection agency (PCA).

• First, the IRS will send a letter to the taxpayer and their tax representative informing them that their account was assigned to a PCA and giving the name and contact information for the PCA. This mailing will include a copy of Publication 4518, What You Can Expect When the IRS Assigns  Your Account to a Private Collection Agency (.pdf).
• Following IRS notification, the PCA will send its own letter to the taxpayer and their representative confirming the account transfer. To protect the taxpayer’s privacy and security, both the IRS letter and the PCA’s letter will contain information that will help taxpayers identify the tax amount owed and assure taxpayers that future collection agency calls they may receive are legitimate.

How it works
The private collectors will identify themselves as contractors collecting taxes on behalf of the IRS. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act, and like IRS employees, must be courteous and must respect taxpayer rights.

Private firms are not authorized to take enforcement actions against taxpayers. Only IRS employees can take these actions, such as filing a notice of Federal Tax Lien or issuing a levy.

Payment options
The private firms are authorized to discuss payment options, including setting up payment agreements with taxpayers. But as with cases assigned to IRS employees, any tax payment must be made directly to the IRS. A payment should never be sent to the private firm or anyone besides the IRS or the U.S. Treasury. Checks should only be made payable to the United States Treasury. To find out more about available payment options, visit IRS.gov/Payments.

More information
The IRS established the Private Debt Collection program in 2016, as authorized under federal law, and contracted with several agencies to collect certain unpaid tax debts on the government’s behalf. To learn more about the private debt collection program, visit the Private Debt Collection page on IRS.gov. Additional information can be found at the following links:

• Private Debt Collection – Accounts Assigned to Private Collection Agencies
• Questions and answers
• Get Transcript 
• Private Collection of Overdue Taxes YouTube Video
• Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency (.pdf).
• Understanding Your CP40 Notice

Taxpayer Bill of Rights | Internal Revenue Service (irs.gov) 

Please visit Identity Protection PIN to complete the information needed for your Identity Protection PIN

Please note- January 18 was the last day to submit new Admissions and Amusement returns or make payments using the bFile system. More information about Admissions and Amusement tax payments can be found under our “Interest and Penalty Policy” at our website marylandtaxes.gov/MDTaxConnect 

January 23, 2024 – February 5, 2024 – Due to the transition to Maryland Tax Connect, business tax filing and payment options will not be available until February 6, 2024. Business taxpayers will not be penalized for late filing. Filings and payments affected by the transition will be considered timely.

• January 22, 2024 – Last day to access any incomplete returns or data on bFile and complete Withholding or Sales and Use Tax transactions. bFile will still be available in “View Only” mode. 
• January 26th, 2024- Business taxpayers who need to change their address on file with the Office of the Comptroller must submit a Change of Address form by January 26th. Completed forms should be emailed to CentralRegistration@marylandtaxes.gov.
• February 5-28, 2024 – PIN Notices mailed to business taxpayers to register for MD Tax Connect and authorize third-party access.
• February 6, 2024 – Maryland Tax Connect goes live for business taxpayers and third parties to file a return and make payments as a registered user or guest

As a reminder, Maryland Tax Connect will be a self-service portal that will allow taxpayers to file their taxes online with increased ease and security, enabling taxpayers to interact with the Comptroller’s Office more efficiently. The portal is designed to allow taxpayers to complete important functions themselves, accessible from either a mobile device or a desktop, including:

· Making online payments

· Updating personal information

· Retrieving tax information

· Filing returns

· Viewing filing and tax history

· Registering a business

· Applying for or renewing business licenses

· Applying for sales and use tax exemption certificates

Although all Maryland taxpayers will eventually be able to access Maryland Tax Connect to easily file and pay their Maryland taxes, the process will roll out in phases beginning in February 2024 with business tax types. By 2026, all Maryland taxpayers will be able to pay their state taxes and interact with the Office of the Comptroller through the Maryland Tax Connect portal.

Check marylandtaxes.gov/MDTaxConnect for updates.

WHS will be filing the Form 1 (2024) electronically using the MD business express website. Once the form is submitted by WHS, an email will be sent from the Maryland Business Express (donotreply@egov.com), for the client to sign the submitted form and pay the annual fee, if applicable. There will be a $3 e-check fee or 3% credit card fee charged by SDAT.