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Nationwide Injunction Halts Beneficial Ownership Information Reporting Requirements

A federal district court in Texas has issued a nationwide preliminary injunction blocking the enforcement of the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). This decision, made in the case Texas Top Cop Shop v. Garland (December 3, 2024, U.S. Dist. Ct., Eastern District of Texas, Case No. 4:24-CV-478), has significant implications for businesses across the United States.

Background on the Corporate Transparency Act

The CTA, enacted to combat money laundering and enhance financial transparency, requires most U.S. corporations, limited liability companies (LLCs), and similar entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Initially, this reporting requirement was due by January 1, 2025, with penalties for non-compliance.

Court Ruling

The court ruled that Congress exceeded its constitutional authority by enacting the CTA, stating that it infringed upon states’ rights to regulate business entities. As a result, the court issued a nationwide injunction prohibiting FinCEN from enforcing the reporting deadline.

The court’s opinion emphasized that the CTA overstepped federal authority, making it an unconstitutional directive. This ruling effectively halts the implementation of BOI reporting requirements until further notice.

Implications for Businesses

For now, businesses are not required to file […]

By Linkenheimer LLP|2024-12-06T16:53:49+00:00December 6th, 2024|business, corporation, New Tax Laws, News|0 Comments

From Flights to Meals: A Guide to Business Travel Tax Deductions

As a business owner, you may travel to visit customers, attend conferences, check on vendors and for other purposes. Understanding which travel expenses are tax deductible can significantly affect your bottom line. Properly managing travel costs can help ensure compliance and maximize your tax savings.

Your tax home

Eligible taxpayers can deduct the ordinary and necessary expenses of business travel when away from their “tax homes.” Ordinary means common and accepted in the industry. Necessary means helpful and appropriate for the business. Expenses aren’t deductible if they’re for personal purposes, lavish or extravagant. That doesn’t mean you can’t fly first class or stay in luxury hotels. But you’ll need to show that expenses were reasonable.

Your tax home isn’t necessarily where you maintain your family home. Instead, it refers to the city or general area where your principal place of business is located. (Special rules apply to taxpayers with several places of business or no regular place of business.)

Generally, you’re considered to be traveling away from home if your duties require you to be away from your tax home for substantially longer than an ordinary day’s work and you need to get sleep or rest […]

By Linkenheimer LLP|2024-11-15T18:22:47+00:00November 15th, 2024|business, deductions, expensing|0 Comments

Employers: In 2025, the Social Security Wage Base is Going Up

As we approach 2025, changes are coming to the Social Security wage base. The Social Security Administration recently announced that the wage base for computing Social Security tax will increase to $176,100 for 2025 (up from $168,600 for 2024). Wages and self-employment income above this amount aren’t subject to Social Security tax.

If your business has employees, you may need to budget for additional payroll costs, especially if you have many high earners.

Social Security basics

The Federal Insurance Contributions Act (FICA) imposes two taxes on employers, employees and self-employed workers. One is for Old Age, Survivors and Disability Insurance, which is commonly known as the Social Security tax, and the other is for Hospital Insurance, which is commonly known as the Medicare tax.

A maximum amount of compensation is subject to the Social Security tax, but there’s no maximum for Medicare tax. For 2025, the FICA tax rate for employers will be 7.65% — 6.2% for Social Security and 1.45% for Medicare (the same as in 2024).

Updates for 2025

For 2025, an employee will pay:

6.2% Social Security tax on the first $176,100 of wages (6.2% × $176,100 makes the maximum tax $10,918.20), plus
1.45% Medicare […]

By Linkenheimer LLP|2024-10-28T14:25:33+00:00October 28th, 2024|business, employer, social security|0 Comments

Advantages of Keeping Your Business Separate from its Real Estate

Does your business require real estate for its operations? Or do you hold property titled under your business’s name? It might be worth reconsidering this strategy. With long-term tax, liability and estate planning advantages, separating real estate ownership from the business may be a wise choice.

How taxes affect a sale

Businesses that are formed as C corporations treat real estate assets as they do equipment, inventory and other business assets. Any expenses related to owning the assets appear as ordinary expenses on their income statements and are generally tax deductible in the year they’re incurred.

However, when the business sells the real estate, the profits are taxed twice — at the corporate level and at the owner’s individual level when a distribution is made. Double taxation is avoidable, though. If ownership of the real estate is transferred to a pass-through entity instead, the profit upon sale will be taxed only at the individual level.

Safeguarding assets

Separating your business ownership from its real estate also provides an effective way to protect the real estate from creditors and other claimants. For example, if your business is sued and found liable, a plaintiff may go after all of its […]

By Linkenheimer LLP|2024-10-10T18:31:18+00:00October 10th, 2024|business, llc, real estate|0 Comments

Upcoming Beneficial Ownership Reporting Requirement under the Corporate Transparency Act (CTA)

Starting January 1, 2024, most U.S. entities must comply with the Corporate Transparency Act’s (CTA) Beneficial Ownership Information (BOI) reporting requirement, implemented by FinCEN to enhance financial transparency and combat crime. This requirement mandates corporations, LLCs, and similar entities to report information about their beneficial owners—individuals who hold significant control or at least a 25% ownership stake. Required disclosures include each beneficial owner’s name, address, date of birth, and a unique identification number, such as from a passport or driver’s license.

Entities that are newly formed or registered in 2024 in the U.S. must file their BOI reports within 90 days of creation (effective 2025 new entities will only have 30 days), while existing entities must comply by January 1, 2025.

Exceptions to the Requirement

There are several exceptions to the requirement, one common exemption is for a “Large Operating Company” which is a company with more than 20 full-time employees, gross receipts or sales over $5 million, and a physical presence in the U.S. Additionally, regulated entities like banks, publicly traded companies, and insurance companies are also excluded from the mandate.

Pending Legal Challenges

While the […]

By Linkenheimer LLP|2024-10-09T17:22:28+00:00October 8th, 2024|business, New Tax Laws, tax form|0 Comments