New Programs, Looming Deadlines, and Forum Insights

Roger Harris and Annie Schwab explore recent tax policy changes, including updates to voluntary disclosure programs and new IRS enforcement efforts. They discuss the ongoing challenges surrounding Beneficial Ownership Information reporting requirements and their potential impact on tax practitioners. The hosts also preview their upcoming live podcast recording at the IRS Tax Forum in Dallas, offering listeners a glimpse into this valuable industry event.

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• (00:00) - Welcome to Federal Tax Updates
• (02:19) - Current Political Climate in DC
• (02:53) - Legislative Updates and Tax Relief
• (08:49) - Digital Asset Reporting
• (09:32) - Security Summit and WISP
• (19:13) - Employer Retention Credit Updates
• (28:08) - IRS Moratorium and Fraud Analysis
• (31:39) - Penalties and Promoter Fines
• (32:24) - ERC Business Resurgence
• (35:12) - Beneficial Ownership Information Reporting
• (37:40) - Challenges and Uncertainties in BOI Compliance
• (46:54) - IRS Forums and Upcoming Events

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The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

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Creators & Guests

Host

Annie Schwab, CPA

Franchisee Operations Manager at Padgett Business Services

Host

Roger Harris, EA

President at Padgett Business Services

What is Federal Tax Updates?

CPAs, Enrolled Agents, and Tax Preparers can keep up-to-date with the latest federal tax information while earning NASBA approved CPE credits and IRS approved CE credits by listening to the bi-weekly Federal Tax Updates podcast. The hosts Roger Harris and Annie Schwab have over 75 years of tax experience between them, which has been featured in various media outlets including Wall Street Journal, USA Today, The Morning Business Report, Bloomberg Business News, and Accounting Today.

https://share.descript.com/view/3BLuzSqEvww

Roger Harris: Hello everyone. It's another federal tax update podcast. I am Roger Harris and I'm joined, as always by Annie Schwab. Annie, how are you today?

Annie Schwab: I'm doing great. How about you, Roger? I know you've been traveling.

Roger Harris: I'm not bad. We're going to talk a little bit about. I'm heading your way to come to your hometown in a week or so, and we'll talk about that when we get through. So I did look [00:00:30] to see it's going to be like 105 next week when I'm there.

Annie Schwab: Oh it's hot. It's really hot. Our heat index is like 110 right now in Dallas.

Roger Harris: Well, so if you can do something about that over the next couple of.

Annie Schwab: Days, I do. I'll try. Okay.

Roger Harris: All right. Uh, we're going to kind of just kind of jump all over the place. There's actually some, some of the things we always talk about. There's some new stuff. Uh, we're kind of a little past midyear, but there's things that, you know, are on the horizon. So we've got a lot of things to jump [00:01:00] around. We've actually got something that has come up where in the last hour. So yeah, this is not not from an hour when you're listening to it. But as we sit here and record, we've got some information that's, that's literally, you know, so fresh it's within the last hour. So anyway, you want to start.

Annie Schwab: Huh. Let's take a, let's start with sort of like what's happening. What's the vibe in DC, what's kind of going on there. Um, how about we start there and then we'll get into, of course, UGK and boy. [00:01:30]

Roger Harris: Yeah, yeah. Because I think since the last time we recorded, we have a new presidential candidate. We have.

Annie Schwab: Oh we do. That's right.

Roger Harris: Yeah. I mean, a lot of things have changed. So kick us off and we'll kind of jump around and talk about how all the politics that we're going to be forced to put up with for the next 90 days could impact our life.

Annie Schwab: Sure, I can kick us off here. So, um, where we left off pretty much was a lot of potential legislation being talked about Um, no real big [00:02:00] movement. The only thing that is worthy of noting is the tax relief for American Families and Workers Act. It had passed the House, I want to say, in January or February quite a bit ago. Um, but it did not. It has failed to pass in the Senate. Um, that was one of the bills that had some bringing back the child tax credit, restoring R&D. And then it had some disaster relief, additional provisions in there. We also saw there was a proposed IRS funding [00:02:30] bill that also did not pass. It's actually been punted to 2024. So we're kind of just sitting here. We've got a new presidential candidate. We've got both the Republicans and the Democrats sort of getting ready for this. What's going to happen with all the Tax Cuts and Jobs Act provisions there? Those are set to expire at the end of the year. So there's a lot of negotiations. Maybe I should say they're even put together some teams. They're calling them tax [00:03:00] teams. I think there's ten of them. It kind of addresses some of the major ten major provisions of the Tax Cuts and Jobs Act. And what happens if should it be extended, can it be extended? Extended? How to extend it? If so, uh, and that's being discussed on both sides, both Democrats and Republicans.

Roger Harris: Yeah. And actually there was you can begin to get some idea of what might happen. Now again, we've got an election in November. Then the Tax Cuts and [00:03:30] Jobs Act expire at the end of 25. But we've got, you know, by the beginning of 25, we'll know who controls what levers in Washington, the House, the Senate, the white House. You know, that doesn't mean they have to wait till the end of 25. But even today, there was another bill. Or at least I read about it today. I don't know exactly when it was introduced that attempted to expand the child tax credit again. So what you're seeing is that clearly, one part of anything [00:04:00] that happens is going to be to expand that child tax credit, because that gets that gets support on both sides of the aisle. Right now it's the vehicle by which to actually get anything done. So that'll be one chip that'll be played in exchange for for something else because that has been consistent. You mentioned the bill that was passed that didn't by the House, right. There were some Irk pieces to that. [00:04:30] And I think the IRS was waiting to see if that bill passed. And now that it didn't. And we'll talk about that. There's been a lot of action on the IRC that the IRS went ahead and took, even though that the bill didn't pass. So they waited for it. You know, the interesting thing, and you and I haven't talked about it, but what I find really interesting because it was almost laughable a couple of weeks ago, when I was at one of the IRS forums that Trump had proposed to make tips [00:05:00] tax free. I saw that.

Annie Schwab: And now the Democrats are on.

Roger Harris: Board. Now the Democrats. So people were laughing about it. And now both parties have, uh, proposed to make tips tax free, which really creates all kinds of questions. And it just shows where in the politics world and who knows what that'll look like if they ever. I did hear someone yesterday say that. Well, the Democrats put a limit on it. And Trump says hedge fund managers [00:05:30] could get tips tax free. Well oh.

Annie Schwab: Well.

Roger Harris: I don't know how many people tip their hedge fund manager, but, uh, but we're in the silly season.

Annie Schwab: But that's that's where. Yep. The silly season. That's what I was going to say. I don't I don't remember your last trip to DC, but I was curious. You know, what's what's the vibe is the, you know, hush hush. Is it quiet? Is it. I know they were on break.

Roger Harris: What They don't break till after Labor Day. Now, that doesn't mean they're not out running their mouth in their home districts about all they're [00:06:00] making, all these promises and everything. Nothing is realistically going to happen. That doesn't have to happen from a calendar standpoint, because right now the election's kind of been thrown up in the air. Again, I think there was a consensus or maybe not a consensus, but a belief that before President Biden stepped aside, that the Republicans were probably going to win the white House and probably the Senate and maybe hold on to the House. Then once he stepped aside, now [00:06:30] we're in a situation where no one seems to really know where we stand. Mhm. Uh, and again, there's, there's a couple of possibilities. The Republicans could sweep everything, the Democrats could sweep everything or we could have divided government, which is I think what most people prefer. They don't think anybody trusts either party to give complete control.

Annie Schwab: Some sort of checks and balances going. Yeah. Yeah.

Roger Harris: Make sure there's a little check and balance that the. That's good that nobody can go crazy. But that's bad in the sense that it makes it harder [00:07:00] to get things done.

Annie Schwab: Anything done I know.

Roger Harris: So it's you know, it's a it's a tough spot to be in. And we sit here now as we record this what 90 days away from election.

Annie Schwab: And I know.

Roger Harris: I don't think I have a sense of how it's going to end. And I don't know that anybody does. And and even if we could predict the presidential side, who's going to control the Senate and who's going to control the House, uh, and do we get divided or something like that? So, uh, it's going to be interesting. You're going to hear a lot of things [00:07:30] talked about. You're going to hear a lot of things talked about in a campaign. But that doesn't always translate into real action reality. Yeah. Um, I'm dying to see how they if they do tips how they do.

Annie Schwab: I saw that too. I saw that too. Uh, yeah. There's a few things coming out, you know, digital asset reporting was is getting big. There's actually a draft release of the form. It's a 1099 Da for Digital Asset. It won't it won't be required [00:08:00] until like transactions after January of 2025. So you know, it'd be the 2025 tax reporting. But I do think that that's a step in the right direction. I think there's a lot of people who are investing in cryptocurrency and digital asset reporting, and to have the brokerages have to issue consistent forms. I think that helps the tax practitioners, the taxpayers, everyone sort of understand that. So, you know, we've seen that and the, uh, the [00:08:30] summit, the IRS, what is it, the security summit. Security summit. Thank you. That's going on right now. And we've I've seen some interesting things come from that as well.

Roger Harris: Yeah. There's one thing that concerns me and I haven't I'm just this is third party information, but someone I trust was told me they were talking to somebody at the IRS about the the digital asset reporting. And his comment to me was, it's going to be so burdensome that he may [00:09:00] not prepare tax returns for people who have cryptocurrency.

Annie Schwab: Oh, really?

Roger Harris: That this was hoping.

Annie Schwab: It would help.

Roger Harris: This isn't going to be like what we're used to, where we get a statement on stocks and we have all the long term in one bucket and all the short term and another bucket. And we enter two numbers. I haven't seen the form wasn't in the session he was referring to, but he's a he's a bright guy and he's, uh, prepares a lot of tax returns. So it's going to be interesting to see. I think they said we would see the the draft form soon and get some, [00:09:30] some comment period and things since we do have 2025. But um, obviously they're concerned about all the activity going on in cryptocurrency. So but who knows what kind of reporting. And the brokerage companies of course, or whatever the companies are that handle crypto were trying to make their life simpler too. But I want to say, he implied that like, you're going to get one for every transaction, which seems hard for me to believe.

Annie Schwab: Wow. I was hoping they would make this process simplified easier on [00:10:00] the the taxpayer to understand what's going on, easier on the tax practitioner to get the information, you know, ported properly. Well, yeah. Oh well, I was excited about it. So much for that.

Roger Harris: Well you would hope that that reporting would make it easier because right now, you know, most people don't have records because they don't. They're just dealing.

Annie Schwab: They're all in different forms, different systems.

Roger Harris: So I think it's got to make it better. But whether it's going to be what we hope for or not again, I haven't seen it. I just heard that [00:10:30] and it's from someone I trust. So it bothers me that it's not going to be as simple as it'll be better, but will it be streamlined? Yeah. Will it be streamlined? Now back to the security summit. A lot of activity. I know obviously there's a lot of concern at the IRS and there should be concern in our community as well about, you know, the scammers that are out there and the folks that are trying to not only steal our data but scam taxpayers into things. [00:11:00] So there's a couple of areas there that what the what came out recently is the IRS issued some new guidance on what they commonly refer to as Wisp, which is a written information security plan. Correct. And we all got to have one.

Annie Schwab: It's not new either. No. Um, the idea of having a written security plan is not new. They have come out with a revised template. Right. So [00:11:30] they issued some additional guidance on a template. It's 28 pages, actually.

Roger Harris: Yeah. And and, you know, there's been some changes now where required to use multi-factor authentication to protect our data. Um, so again and again, one of one of our friends, you know, was presenting at the forums who was a victim, if you will, of their system being hacked a couple of years ago and [00:12:00] talking about the ramifications that can have on a, on a practice, because I think a lot of us think that we're so small, no one cares about us. But what we think is small is worth potentially millions of dollars to a hacker. And we've got to make sure that we have a written plan, we've got to have our employees trained, we've got to be trained, we've got to get more awareness to, you know, watching emails and just.

Annie Schwab: You know, clicking on links.

Roger Harris: Yeah. [00:12:30]

Annie Schwab: Opening documents, attachments, anything.

Roger Harris: Yeah. And the scammers are getting pretty good at making it look like, you know, here comes a message from looks like Microsoft that says, hey, we need to update your password. And it looks as legitimate as it can in the next thing you know, they're in your system and you're either subject to ransomware or theft. And so I guess the message and I think we've said this before, Andy, don't just have a Wisp [00:13:00] because you're required to have one. Have one because you need one.

Annie Schwab: And and keep it as a like a living document. Revisit it, update it, don't just, you know, take the template, fill in your information and then drop it in a drawer. That's not going to help you out. No. Um, but it is important. And I think the multifactor I think that I'm glad it's required. Um, I feel like many practitioners, practitioners were already using, um, like an MFA, but, hey, having it be required can't hurt. So [00:13:30] I'm. I'm fine with that.

Roger Harris: Yeah. And I think most tax softwares have probably already instituted that. You know, I know ours has and I'm assuming all are the same. I do know that, you know, you need to understand what's in your written plan because that's really what you do. If unfortunately you have a problem, is you go right down the steps of who to call, when to call, what to tell, what are the rules in terms of notifying clients? And, um, um, what role, you know, can the IRS play? I mean, all these things [00:14:00] need to be there because if it happens to you, this is going to be your roadmap to how to get through it and survive it.

Annie Schwab: And sometimes that you find out in a day or two, and sometimes it could be months. So, you know, to be able to stop it as soon as it's come, to come to light and then remedy it. And, you know, try to try to keep your practice going while you solve all the issues. Yeah.

Roger Harris: And one of the things it's not necessarily in the the wisp, but something you need to think about is [00:14:30] how to monitor your firm because you mentioned it. Sometimes you can be a victim of, uh, of a hacker and not know it for a while. Right? So, you know, do little things like check your feet again during the busy season, particularly check your PTEN account, check your effin account, you know, look for kinds of activity that you know isn't normal, and pay attention if you see something that looks a little bit out of normal and and don't assume that it's, well, it's [00:15:00] just a mistake, it'll fix itself. Because the longer these things go on, yeah, the worse the damage is, and potentially the worst damage you'll do to your clients. Because if you in the case that that we had internally, the clients to our knowledge, never really suffered because it was caught soon enough in the proper actions were taken that to the extent that there was a problem or stress or burden or whatever you want to call it, it was at the office level, not at [00:15:30] the client level. Right?

Annie Schwab: Scary times though. I mean, she said it was one of the worst things she's ever had to go through and that she's right.

Roger Harris: And the IRS has just announced I think, well, by the time you hear this, they will have announced it. They haven't announced it yet. Um, they're putting together another coalition to help try to alert taxpayers to some of the schemes and scams that are out there, particularly through social media, where, [00:16:00] you know, it's kind of like, you know, IRC we've talked about it a thousand times. There's just so much money in the tax code that they can rip people off on and convince people of things they're not entitled to. And so the IRS is putting together a group of it's going to be all the state and local tax agencies. It's going to be the IRS. It's going to be the tax industry to try to work on a communication plan, to communicate to taxpayers and small business owners how to be alert to what [00:16:30] looks like a legitimate bit of advice or action, or something you can do, particularly through when we're all on social media now, you know, and and things can look, you know legitimate and look like they're above board, but they're not.

Annie Schwab: And so it's hard sometimes to tell two they're really good.

Roger Harris: Oh they're they're excellent at it. And, and it's getting getting out of hand. And the IRS is soliciting help from all the people on the outside to try to educate [00:17:00] and alert taxpayers and small business owners on how to recognize when something that looks too good to be true might actually be too good to be true.

Annie Schwab: I think that's great.

Roger Harris: Yeah. So, uh, that's not official as we record, but it'll be efficient by the official. By the time any of you actually listen to this podcast, that that that group will have been formed and something else that we'll have to watch for and advise our clients, which is a good lead in to [00:17:30] the employee retention credit. And kind of there has been some changes. There has been some action, particularly once, as we mentioned earlier, once that piece of legislation became clear, it's not going to pass, right? Then the service started taking their own steps. So when we planned for this, we thought we had the most current information.

Annie Schwab: That is true. As of yesterday.

Roger Harris: Yeah. And but as of today, we have new Annie. Why don't you start [00:18:00] with what we thought was going to be the most current information, and then I'll touch on what has come out in the last hour. That really doesn't change anything you're going to cover, but kind of adds to it.

Annie Schwab: Yeah. Sure, sure. Um, and for I know we talk about IRC nearly every podcast. So if you've been following along with us, um, some of this might be a little redundant, but, uh, IRC was actually put on hold and it was put on hold September 14th of 23, mainly because of the aggressive [00:18:30] promoters and marketers taking advantage of small business owners filing ineligible claims. Lots of money fraud spilling out. And so the IRS wanted to get a handle on it. So just put a stop to it. And the deadline for claiming the IRC for these tax periods. Right now, the deadline for IRC claims for the period of 2020 is April 15th of 2024. So [00:19:00] the first quarter has has passed. But we do have we have the 2021 tax period and that will go through April 15th of 2025. So we are sort of in this limbo. Could it potentially be extended. Are there going to be some changes to the statute of being able to claim IRC? We've even had some injunctions sought. There was an in Arizona, there was a firm that wanted to basically say that the IRS improperly implemented the IRC moratorium, and they're holding claims [00:19:30] and backlog of, you know, 1.4 million claims that haven't been processed. And I don't know if that number is true or not. But regardless there are lots and lots and lots of claims that have just been sitting. However, that injunction was was filed and it was declined. Right. So we sort of there we were sitting there hoping for, like you said, that bill to pass where there might be some changes to the statute or the period in which claims could be filed when it didn't go through, the IRS [00:20:00] did decide to make a little headway, make a couple of announcements. And one of the announcements was related to the voluntary withdrawal program. There was a program, I guess you could say, round one of the program where actually like $670 million worth of claims were voluntarily removed, false claims, people pulled back their claim. And so now, now of today, what's what's the latest, Roger?

Roger Harris: Well, [00:20:30] the voluntary program, I mean, excuse me, the withdrawal program is still there. So if you filed a claim and you think that it's not valid and you just don't want to be involved with it, you don't want to deal with it. You can still withdraw it. What we had earlier that had expired was a voluntary payback, where you could pay back 80% instead of 100% and.

Annie Schwab: Get free.

Roger Harris: Penalty free, and the government would settle [00:21:00] for the 80%. And in conjunction with what they believed to be the fees, the average of what these mills were charging. So it was an incentive to get those other people who had received the money. Because, remember, in the withdrawal program, in theory, you haven't received the money yet.

Annie Schwab: Or cashed the check.

Roger Harris: Or cash the check. So this was for those that had already received the money and were having second thoughts about whether or not they were entitled to [00:21:30] it. The government was going, and it was hopefully an enticement for the good guys in the system to go talk to these small business owners and convince them that, hey, you really weren't eligible. You kind of got duped by the mills. So here's a little narrow time frame that you can pay back 80%. Keep the other 20. If you didn't pay but ten, you wouldn't make money off of it.

Annie Schwab: Yeah, it was just a flat 80.

Roger Harris: No penalties, no interest. Boom. Do it.

Annie Schwab: No amending of tax returns. Nothing.

Roger Harris: So now that expired. [00:22:00] And um, so we were back to basically having just the withdrawal program and it was everything was sitting on hold waiting to see how this legislation happened and, and a couple of other things to keep in mind. Most of the money in the IRC program is for 2021 years, not 20. Remember, in 25,000 per employee was the maximum we got into 2021. Now we're talking about 7000 a quarter. And you know big money in 21. [00:22:30] So the IRS was was just sitting there hoping Congress would help Nothing happened. And so today, the IRS has reopened the voluntary disclosure program. Until November the 22nd.

Annie Schwab: Of this year, of.

Roger Harris: This year for 2021 claims only. And this time, though, you have to pay back 85%, not 80%. So they didn't want [00:23:00] to make people who delayed get the same benefit as those who acted, you know, on time. But it's still another opening to say, okay, I've reconsidered now, you know, I didn't make it in time for the first voluntary disclosure, but now there's an opening through November the 22nd. There's also and we'll talk a little bit about the enforcement, because the IRS has started enforcing and analyzing. And [00:23:30] we'll talk about what they did during the moratorium But you really need. If you have clients that are eligible for this program and are thinking about it, you need to move quickly. Because if the IRS has already written you and said we don't think your claim is valid, you don't. You can't then come up and say, well, hold on, let me withdraw it or let me take it. You have to have this claim or this plan to repay in place before the IRS notifies [00:24:00] you that that quarter is in question. So if you try to wait it out till November 21st.

Annie Schwab: It's not going to.

Roger Harris: You may not make it, because what the IRS was doing during this moratorium was analyzing all those millions of claims that they had, trying to see where they could analyze the data to determine which of those were valid claims, which of those were not valid, which of those they had questions and, and any talk about [00:24:30] what they discovered and what they're doing based on those claims that they had.

Annie Schwab: Right? So if you think of like a spectrum of all of these claims, they sort of have ranked them like there's, you know, the ones that are identified as, as valid, they're going to be quickly moving through them, getting the payments through the pipeline in the next weeks, like weeks from now. And they've identified 50,000 valid ERC claims. So they're just cutting a chunk off, starting to process the payments. [00:25:00] They're low risk claims. Um, and they're saying weeks people can have their money in weeks. And then on the other end of the spectrum, they're sending out just improper ERC denying your claim invalid. And they're sending out 28,000 letters to people. Just blanket just disallowing. Now, of course you can appeal and you can go through the process, etc.. But that they're estimating is like $5 billion in improper payments. [00:25:30] Um, so they're kind of pulling off the two ends, and then all the claims in the middle probably are, you know, probably need a little bit more time for investigation. You might be getting letters asking for additional information. Um, maybe some quarters looked okay, some didn't. Um, so those are probably going to take longer to process, but at least we're seeing movement. For the longest time it was just we were stuck. Nothing was happening.

Roger Harris: Nothing was happening. Right.

Annie Schwab: And and so at least I, [00:26:00] I see some light, I guess, at the end of the tunnel, um, some hope maybe that, you know, those legitimate claims, these people will finally get their money. Um, and then hopefully the with the voluntary disclosure program back open and now this 50,000 of, I'm sorry, 28,000 people who are getting denied. Maybe we'll see some decrease in the number of claims just sitting in the warehouse, maybe education and focus and maybe some metrics that they've come up with. Will help [00:26:30] you weed through the other ones. It sounds like they've figured out statistics, metrics, some kind of identifying pattern. Um, yeah. To help them through the processing.

Roger Harris: This moratorium, they weren't just sitting around doing nothing. They were trying to analyze. Yeah. What they had, uh, you know, they were kind of handed a challenge here. You've got massive fraud in a program that came during a pandemic with little or no time to really [00:27:00] plan. We can all look with hindsight and say, well, we could have done this. We should have done that. All this sort of stuff. And I mean, astronomical amounts of money being handed out that they weren't eligible. So the service was kind of tasked with pay the right people and punish and catch the bad people. And, uh, with what you got. So they took that moratorium and they did a lot of analyzation of the data. And, you know, so now they're in a position to start processing again, [00:27:30] and they've extended the moratorium. They've opened it back up. I should say so.

Annie Schwab: Reopened?

Roger Harris: Yeah.

Annie Schwab: They reopened the term that they're using.

Roger Harris: In terms of returns they'll process, but now they feel like they can process them and put them into what you said. One of those three buckets either. Yeah. They're sending them the money. They're clearly I mean some of it's obvious. I mean, they're getting claims for businesses that don't even have employees, you.

Annie Schwab: Know, or weren't even in business for the periods [00:28:00] for which they're claiming.

Roger Harris: I mean, some of it's just it's obvious. But then there's that group in the middle, but they've also come up with some what I found interesting. And I was in a discussion, uh, and actually the commissioner was part of it. They're rejecting some claims on the fact that their gross receipts didn't decline. And people are saying, well, hell, you didn't ask us for that information. How do you know our gross receipts actually went up, right? Because you can they can look and see when the moratorium dates were right. [00:28:30] Of course. So by default, you're saying that there had to be some sort of decline in revenue or something, and they're rejecting them on that because they've studied it and done their analytics? No, no, they're not going to say they're perfect, but they feel pretty confident that they've made an accurate determination that the analytics. And someone said, well, how can you do that? You don't have that information. And their answer was, well, you know, we don't know how long a child actually lived in a parent's house, but we're pretty good at determining [00:29:00] which parent gets to claim them, you know, based on other facts and circumstances. So we feel like we're going to be accurate. I don't I'm going to use a number. I'm not going to hold the commissioner to it, but I want to say nine out of ten times and you have the right to appeal if we're wrong.

Annie Schwab: Right, right.

Roger Harris: So, um, so they're being pretty sophisticated and pretty aggressive in terms of as they so what we have now is we have the IRS working these cases, either paying them, questioning them, or rejecting them. [00:29:30] We now have the ability to withdraw the claim or pay back 85%. So we're kind of in a situation now where we can take a second look, at least at 2021, and decide what we need to do while we continue to wait and see if Congress does anything about statute of limitations or things like that. The other thing that was in those bills that's kind of tough from the IRS's position [00:30:00] is it puts some pretty stiff penalties on the promoters. Yes. Uh, fines, jail.

Annie Schwab: Time, all kinds of stuff. Yeah.

Roger Harris: Which they don't have that. So we're kind of in a second wave of where the IRS is doing what I think a lot of us are glad they're doing in terms of processing claims, paying the good ones, rejecting the bad ones, questioning the ones in the middle. We now have options, we can either tell our client, withdraw it if you haven't got it yet, [00:30:30] or if you think you need to pay it back. We've got a window to do that, but we need to move quickly before the deadline approaches.

Annie Schwab: 22nd of November.

Roger Harris: Um, so we're back in. I don't want to call it this, the IRC business in some extent. What I found interesting is I've started to hear more commercials again recently.

Annie Schwab: Did you? I haven't noticed an uptick yet. Yeah.

Roger Harris: And I don't know why now, but they're they're talking a little differently there. Oh not everybody's eligible and we're good at what we do.

Annie Schwab: Oh [00:31:00] right.

Roger Harris: You don't have to pay us until you get your money. So the end result is the same. But they're back. I've heard them back on the radio, uh, because it just kind of went silent when the moratorium. Right. Yeah.

Annie Schwab: So interesting.

Roger Harris: Yeah. So, you know, and I don't think we're through hearing from the IRS on IRC.

Annie Schwab: I don't think so either.

Roger Harris: Like I said literally it changed today. Mhm Um, well, it was last week. We got the first.

Annie Schwab: Kind of that was the notices going out, the [00:31:30] the letters going out, the instant rejections and the you're valid here comes your money kind of letters.

Roger Harris: And then today we get this voluntary disclosure program opening back up, you know, with a date on it. There were some other and I'm not going to quote them because I don't have it here, but they they kind of updated the notice that have gone out in each of those buckets. So there's more and more going out in each of those areas in terms of, of the enforcement of it. So, uh, I [00:32:00] think they're doing pretty much the best they can do, given the volume and the constraint that they have. So we're right. Irc we we said this on almost all our podcasts.

Annie Schwab: It's never going to end, never.

Roger Harris: Going to go away. And I'm sure we will be talking about it again on future podcasts. But there's some opportunities for us now to go back and revisit those clients that we have concerns about. Hopefully one of these days they'll they'll [00:32:30] figure out that telling us we can't amend tax returns was a lousy idea.

Annie Schwab: Oh, yeah. I don't know.

Roger Harris: Because that's where I think we're really in. Yeah, we're in a situation now that if someone doesn't want us to amend the return, they're only. The reality is, if we can't amend the return because we don't think the government or the claim is accurate, then the government's either going to lose 100% instead of, say, 80% of the money because they didn't get anything back, or they're going to go get away with it completely [00:33:00] because they do nothing and get away with it.

Annie Schwab: That's going to I mean, it's going to happen.

Roger Harris: Or they'll go to prepare that doesn't know the rules or doesn't care about the rules, and they'll amend it and they'll get away with that. So the people that are going to suffer are those that are doing it right, doing it right. So we'll see if we can ever get that fixed. But that's kind of where we are.

Annie Schwab: Okay. Okay.

Roger Harris: The other thing that will never end or it may never start.

Annie Schwab: And who knows?

Roger Harris: What's the latest on beneficial ownership?

Annie Schwab: Oh, we've still Bohai from FinCEN. [00:33:30] If you haven't heard us talk about it before. Um, beneficial owner information reporting. It is not an IRS thing. It is part of the Corporate Transparency Act. It runs through the FinCEN um, area. And we've had it's actually been on the books for quite a while. But the the and the the training, the education, the communication, it just was very, very, very delayed. And all [00:34:00] of a sudden we have a new law that is technically in effect, um, and will affect most small business owners. Um, and it comes with steep penalties. And, and so we've been not only us we there's been a lot of talk articles written. Um AICPA is is pushing IRS is pushing um, for. Roger's been been interviewed. I don't know how many times about about Bowie. And is it good? Is it bad? Is it fair? [00:34:30] Is it not fair? Is it a very simple law form to fill out in a few minutes, or does it come with lots of gray risky areas? And some some will say one way, some will say the other, but regardless. Um, here we are today. We've got yet another case at the end of July challenging the constitutionality of the Corporate Transparency Act. Um, we've got a lot of legislation, efforts, lawmakers asking, you know, can we delay this? [00:35:00] Can we get more education out? Can we, um, you know, simplify it. There are some exemptions. Unfortunately, the exemptions are not for the smallest of businesses. Actually, it's for the larger, um, more publicly traded companies. And then there's I want to say 23 categories of, of exemptions All the terminology and and definitions of being exempt, being this be a beneficial owner. It's very complicated and [00:35:30] it's new to a lot of small business owners. And well, Roger, I'll let you give your $0.02 on. Well and on what's happening.

Roger Harris: Yeah. And you mentioned even today there was a couple of new things you mentioned. There's been two more lawsuits filed that say it's in violation. I want to say, of the Fourth Amendment, Fourth Amendment. There are some legislative actions to change and delay it. Here's the reality of where we are. The way the law is written, if it goes into enforcement, there's roughly [00:36:00] 32 million businesses that would have to or businesses, nonprofits, homeowners associations. I mean, it's any business that's registered with the state has to do it. So there's about 32 million of they've estimated people that would have to file this form. Only about 2 million have actually done it. So we're at less than 10%. Now why is that? We're at less than 10%. Number one, because we've got till December. And a lot of companies like us are waiting to see what happens before we do it. [00:36:30] Secondly, there's a huge lack of understanding and awareness that this rule even exists. Yep. And thirdly, there's people who may know about it, but they don't think they're able to provide the service to their customers to help them do it. Because there's questions about practicing. Yeah. Like us, are we practicing law or are we interpreting things? I mean, remember, the penalties for this is up to $10,000 and two years in jail. So they're not minor penalties. There's insurance companies that won't cover you doing [00:37:00] it. So there's so much uncertainty in it that FinCEN up to now has been fairly rigid in their, I'll say, denial of the realities that we face. Right. That there is concern, there is lack of knowledge. So what we're beginning to see in the background is more chatter, both from the legislative side and from the legal side, that says, we just need to really revisit this [00:37:30] and think about it before we implement it, because being told, well, don't worry about it. We're not after the bad, you know, we're just after the bad guys or I mean, you know, those aren't comforting things when the penalties are $10,000. So as of today, you know, we talk about boy, every, uh, podcast podcast. But nothing has really changed.

Annie Schwab: Not much. Maybe a couple little baby steps. Um, on behalf of FinCEN, they [00:38:00] they have put out some, um, business community outreach programs. They're holding some education events the last few months. Um, they've updated some FAQs, kind of put some extra effort into the website revise some things for additional information, but you're right, we haven't seen them willing to adjust the time frame. So it's it's not a long form. You you go to the FinCEN website and you [00:38:30] access their portal and you fill out the information about who are, you know, beneficial owners. And and you submit it. It doesn't seem as complicated. It's just all the, the intricate parts about it. Who is this? Um, even if you're not a percentage of an owner, but you have, let's say, rights over signing on a bank account where you're actually considered a beneficial owner. So there's all of these, um.

Roger Harris: It's the under the surface. Yeah.

Annie Schwab: Yeah.

Roger Harris: The stuff that's [00:39:00] not apparent and obvious and, and that's where we're trying to get help and guidance. And you're right, they're doing more outreach now. They, they've I've been to three IRS forums and got two more to go. And they're making a presentation to the people who attend. But the people who have attended it said, it's just the basic stuff. We all know they're not answering. They're not answering the questions about under the surface stuff that we want to know, but they're starting to get a little [00:39:30] pushback. But that doesn't mean it'll go anywhere. The bush. I wouldn't hold my breath.

Annie Schwab: I don't know that they're going to make any extensions for the December 31st. So if you were in existence in the beginning of January of this year, you have until December 31st. Well, I mean, we're sitting here and it's August 15th. I mean, that's getting closer and closer. Um, and there are a lot of people who still are completely unaware of the reporting requirement, and it's not something you do, you know, [00:40:00] on April 15th, this is it's not related to filing your tax return. It's not even done through the IRS. This is a completely different animal to say. Um, and so I am hopeful that we might see some leniency with, with the deadline. Um, but again, it's all the the nitty gritty details deep into, you know. Yeah. Reporting.

Roger Harris: And again, the biggest fear is most of us like as you [00:40:30] mentioned, we are we're waiting probably another 45, maybe 60 days to see if there's any indication that we'll get either a delay or get some clarification on some of the issues that you know, are problematic. But if we don't, we've got to start making a plan and taking some action because our clients, a lot of them are going to have to do it. And then we'll go through all that. And then December 15th, everybody will wake up and delay it. And we've [00:41:00] already done it. That's kind of the way it works. But because it's just it's so encompassing. I mean, if you guys aren't familiar with it, you need to go look at it because there's somebody out there that owns ten pieces of rental property and ten different LLCs. They've got ten filings, and they may be penalized $10,000 because no one you know, they say it has to be willful, but they won't tell you how they determine willfulness.

Annie Schwab: Exactly. That has not been clearly defined.

Roger Harris: So when does [00:41:30] me just not knowing about it or saying I'm not doing that, become willful and make you subject to the penalty? That's kind of, I think where some, you know, and then the lawsuits talk about, you know, disclosing information that they don't think the government has the right to do. We I don't know where it's going to go. Again, FinCEN is to your point, they're out talking, but they're not talking about what we want them to talk about. Yeah. Now, well, right before we started this, there was another [00:42:00] thing I got on my phone from FinCEN. I haven't read it yet, but I don't expect there to be an enlightening bit of information because the headline was they're out with politicians talking about it.

Annie Schwab: Right. They're forming some committees to try to get out to the public to inform them, which is a fine effort. It is a fine effort, but it's also a little late, in my opinion, given given the degree of uncertainty around it. And if you haven't, if you're not familiar with it and you haven't been on [00:42:30] a podcast with us, it's not just that initial filing. It's not like, oh, you have to go log in to the website, create an account, and fill out a form. It's what happens once that form is submitted. Your clock, so to say, starts ticking. And you only have a very, very narrow time frame to make changes to that original form or you're subject to the same penalties. So it's like it's almost like a living form that needs to be updated for any change marriage, change of name, address [00:43:00] change, etc.. Um, and so it's not like it's a one and done and you revisit it on an annual basis or, or whatnot. It's kind of this Ongoing compliance, and that's a lot of work for a tax practitioner to monitor all the changes with their clients. Um, you know, so you get into how do you help them? How do you how do you help your clients? It's not that practitioners or attorneys or, or it's not that they don't want to be [00:43:30] able to help. It's it's no, it's can I help a tough place to be.

Roger Harris: Right. Can I help? How am I protected from the risk of not disclosing someone that should be disclosed and these penalties being applied, and my insurance company won't cover it, and I don't have guidance. So, I mean, you know, we're sitting here right now and we are in some uncertain times in our industry. We have, first of all, an election that none of us know how it's going to turn out. [00:44:00] Yep. We have a major piece of tax legislation that's going to expire at the end of 2025 that will be impacted by what happens in the election And, you know, we probably should all go back and try to familiarize ourselves again with what the tax law was before this bill, because that's if nothing.

Annie Schwab: Is done, goes back.

Roger Harris: To that's what it goes back to. We have an ever changing world of employee retention credits and what we can do and not do. And we have this big thing hanging over us called beneficial ownership interest that is [00:44:30] heading our way by the end of the year. And a lot of us don't know if we can do it, know how to do it, or have insurance to cover. So there's some there's some pretty major uncertainties floating around out there and a lot to get done. And I guess the last 4 or 5 months of the year, um.

Annie Schwab: It'd be tough. Yeah.

Roger Harris: And how do we charge for doing all these things that, you know, we're going to be asked to do? So it's going to be an interesting rest of the year. [00:45:00] Um, and, and unfortunately, a lot of it's in the hands of the people in Washington who knows how that's going to turn out.

Annie Schwab: I know Roger well. I will say this the IRS forums have been a packed jam packed with information. Paget's been at all of them. Roger's been speaking. I'm going to the one in Dallas coming up. So, um, this will be. If you're not.

Roger Harris: Familiar with the IRS forums, there's five forums across the country they offer CPE, uh, put on by the [00:45:30] IRS. They bring in outside speakers from different associations. Annie mentioned we've been at three of them. We're going to do something a little interesting. Uh, Dallas, where Annie lives, is the next forum, and we're actually going to record our next podcast live from the IRS forum. And, well, it'll be live for us. It won't be. It won't be live going out of. But we're going to record it at the IRS forum. Uh, we're going to talk to some of the IRS people there. We're going to talk to some of the [00:46:00] associations that are there and why they're there, and maybe some attendees, but give you a flavor if you've never been to one of these forums? There's probably they've all sold out. There's 25 to 3000 people at these things. Again, there's CPE offered. There's, uh, a lot of.

Annie Schwab: Booths, a lot of vendors. Yeah. Yeah.

Roger Harris: Uh, you can even they're even interviewing to hire at these forums. Oh, yeah. The IRS is doing interviews and hiring people there. You [00:46:30] can take specific cases in they have case resolution. You have to pre-register for that. They're really something. If you've never been to one you might really want to look at them. They move around each year. This year's about to say Chicago, Orlando, Dallas, Baltimore and San Diego, San Diego. And next year they'll probably repeat 2 or 3 of those spots and then move them around. So they're usually somewhere, you know, close to you. So if you haven't done it there, they're affordable if you pre-register.

Annie Schwab: Yeah.

Roger Harris: It's really not $300 to attend. Uh, [00:47:00] they give you a little bit of food every now and then too, in the exhibit hall. But you know, we're going to try it. We're going to try recording our next podcast from our our Paget has a booth in the exhibit hall. And, uh, we've been fortunate to recruit a couple of, uh, people from the IRS. I think you'll find them very interesting to, to hear. And then, uh, all the different associations and speakers and things like that. And we're going to try to give you a flavor of an IRS form from, uh, Annie's hometown of Dallas, Texas.

Annie Schwab: Yeah. [00:47:30] So if you're attending, come find us. Come, come find us.

Roger Harris: Yeah, we'll be there for sure. You can come watch us do a live podcast, and you can hear what you're going to hear later. Because like I said, it won't be live in terms of going out to the public. Um, but it'll be sitting there recording it live, and, uh, we got some giveaways and we'd love to meet you and hear your ideas for future podcasts. I've been sure I've been, as Danny mentioned, I've been at all of them. And I've been very pleased to have people have come up and I [00:48:00] have to tell this story. I was standing waiting for my session, and two people walked by me and said, hey Roger, we love Annie. And I looked at him and I went, who are they? And what about me? But they were they were podcast listeners who recognized me and wanted to make sure I told you how much they loved what you do. So we have at least two fans. Oh, you have at least two fans. Thank you, thank you. I don't have any fans, but you have two.

Annie Schwab: That's all right. Well, this has been great, Roger, I know. Thank you. For our listeners. [00:48:30] Um, we appreciate all of your your the attention you give our podcasts. Um, and like Roger said, we'll be coming to you from Dallas. Any final remarks? Roger.

Roger Harris: No. If you're if you're at the forum, come by and see us. We'll be in the exhibit hall. And, uh, thank you for listening. Continue to tell your friends about this. And, Annie, I'll see you in a couple of days.

Annie Schwab: You got it. Take care.

Roger Harris: All right. Bye, everybody.