Beneficial Ownership Information

Beneficial Ownership Information (BOI) reporting is a new federal law requirement created by the Corporate Transparency Act (CTA) which became law in 2021. BOI reporting was created to provide the government with necessary tools to investigate shell companies used by money launderers and criminals. However, in order to “catch the bad guys” most legitimate businesses are now required to report information electronically to the government regarding their beneficial owners. This reporting will be done through the FINANCIAL CRIMES ENFORCEMENT NETWORK of the U.S. Treasury Department (FinCEN).

For companies created or registered prior to January 1, 2024, reporting is required by January 1, 2025. For companies created or registered on or after January 1, 2024, and before January 1, 2025, reporting is required within 90 calendar days of the earlier of receiving actual or public notice that the company’s creation/registration is effective. Updates to such reporting will also be required, and entities and individuals may be subject to civil or criminal penalties due to lack of compliance with the CTA. On its website, FinCEN (www.fincen.gov/boi) has posted Frequently Asked Questions. One answer (B.7.) to questions about report preparation reads that FinCEN expects that many, if not most, reporting companies will be able to submit their (BOI) to FinCEN on their own using the guidance FinCEN has issued.

Not all companies are required to report under this new law, only those companies that meet the law’s definition of a “reporting company” and do not qualify for an exemption. A Reporting Company is any Corporation, LLC, Partnership, or other entity created by registering with a state’s Secretary of State.

Since the information to be reported under BOI arises from determinations that are primarily legal in nature, we have been advised by the AICPA & Industry leaders that Scheffel Boyle should not be involved in the preparation, compiling or filing of these reports. We suggest you contact your legal counsel for any questions you may have.

We at Scheffel Boyle are notifying you of these requirements to ensure that you, our clients, are aware of the BOI reporting requirements and that you can make an informed decision as to whether these new laws are applicable to you.

If you have any questions regarding BOI, please contact your accountant at Scheffel Boyle CPAs. We’re always happy to help!

Did you receive an Identity Verification Letter?

Have you received a letter from the Illinois Department of Revenue (IDOR) asking you to verify your identity? If so, please look at the following FAQs:

1. Why is the IDOR sending me this letter?

They want to protect you and your identity. This is a safety procedure to prevent someone from using your identity to file a false tax return.

 

2. Why was my return selected for additional review?

When you file a tax return using your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), the IDOR wants to verify your information to ensure you are the individual who filed this return.

 

3. What should I do if I receive an Identity Verification letter?

Respond to your identity verification letter in MyTax Illinois without having to create a MyTax Illinois account. Please follow the specific instructions in your letter.

 

4. What should I do if I did not file this return?

  • Go to illinois.gov
  • Scroll down to the section titled: “Identity Verification.”
  • Select the Identity Verification Code
  • Select “No, I did not file this return and need to report identity theft.”
  • Enter your contact information.
  • Click Submit

 

5. I did not verify my identity by the due date. What should I do?

You must submit two required documents to verify your identity – one from each category listed below, within 60 days of the date of this letter.

Category 1: Submit one document that has your photograph and full name:

  • Illinois driver’s license (current or expired less than one year)
  • Driver’s license from any other state (current)
  • State identification card
  • Passport
  • Military identification
  • Government issued photo identification
  • S. high school, college, or university photo ID
  • Employee photo ID card with recent payroll stub
  • Valid Photo ID of 3rd Party Designee

AND

Category 2: Submit one document that has your full name and complete address used on the tax return filed:

  • Utility bill (gas, electric, cable, cell phone, etc.)
  • Bank statement
  • Payroll stub or W-2
  • Property tax bill
  • Rental agreement (signed by landlord and renter)
  • College or university transcript
  • Insurance policy (vehicle, homeowners, renters, health, life)
  • Credit card statement
  • Death Certificate
  • Birth Certificate

 

You may submit the documents:

  1. Electronically – Go to IDOR website: MyTax.illinois.gov, scroll down to the section titled “Identity Verification”, select the Identity Verification Documents link, enter your Letter ID, and follow the instructions.

Note: Submitting your information electronically will result in a quicker and more secure process. However, if you do not have a Letter ID, you must submit your documents by mail.

  1. By mail – send a copy of the letter (or Form IL-425 if you do not have the letter) and copies of the required documents to

ILLINOIS DEPARTMENT OF REVENUE
ANTI-FRAUD UNIT
PO BOX 19049
SPRINGFIELD, IL 62794-9049

 

Warning: Do NOT mail original documents; they accept copies.

 

6. I do not have access to a computer, or I am having difficulty verifying my identity electronically. What should I do?

Follow the instructions under the question “I did not verify my identity by the due date. What should I do?” for submitting documents to verify your identity by mail.

 

For more information: please go to the IDOR website: https://tax.illinois.gov/individuals/identity-verification-letters-information.html

 

If you have any questions regarding verifying your identity, please contact your accountant at Scheffel Boyle or the Illinois Department of Revenue at (800)732-8866.

NASBA Announces New Amendment to CPA Exam

The National Association of State Boards of Accountancy (NASBA) has announced the adoption of a highly anticipated amendment to the Uniform Accountancy Act (UAA) Model Rules affecting the Uniform CPA Exam. 

Since 2004, candidates for the CPA Exam have had 18 months to complete the remaining 3 parts of the Exam upon the passing of the first part. On April 21, 2023, the NASBA Board of Directors voted for candidates to now have 30 months to complete the CPA Exam. This gives candidates another year to complete the CPA Exam requirements.

The UAA Model Rules have no effect on state board rules. While uniformity is encouraged, each state board can choose to adopt this amendment or not. Current candidates for the CPA Exam remain under the existing rules until, if and when, the board to which they applied for makes the change. 

Both Illinois and Missouri State Boards of Accountancy have not yet adopted this amendment.

 

For more information, please read NASBA’s press release: here

 

If you have any questions, please give us a call. We’re always here to help!

2023 Tax Calendar: Quarter 1

January 31 – Employers must file 2022 Forms W-2 (“Wage and Tax Statement”) with the Social Security Administration and provide copies to their employees. 

  • Employers must file (paper or electronic) 2022 Forms 1099-NEC (“Nonemployee Compensation”), reporting nonemployee compensation payments, along with the related Form 1096 (“Annual Summary and Transmittal of U.S. Information Returns”), and provide copies to recipients. 
  • Most employers must file Form 941 (“Employer’s Quarterly Federal Tax Return”) to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2022. If an employer’s tax liability is less than $2,500, he or she can pay it in full with a timely filed return. If an employer deposited the tax for the quarter in full and on time, he or she has until February 10 to file the return. Employers who have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944 (“Employer’s Annual Federal Tax Return”). 
  • Employers must file Form 940 (“Employer’s Annual Federal Unemployment (FUTA) Tax Return”) for 2022. If an employer’s undeposited tax is $500 or less, he or she can either pay it with the return or deposit it. If it is more than $500, he or she must deposit it. However, if an employer deposited the tax for the year in full and on time, he or she has until February 10 to file the return. 
  • Employers must file Form 943 (“Employer’s Annual Federal Tax Return for Agricultural Employees”) to report Social Security, Medicare and withheld income taxes for 2022. If an employer’s tax liability is less than $2,500, he or she can pay it in full with a timely filed return. If an employer deposited the tax for the year in full and on time, he or she has until February 10 to file the return. 
  • Employers must file Form 945 (“Annual Return of Withheld Federal Income Tax”) for 2022 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on pensions, annuities, IRAs, etc. If an employer’s tax liability is less than $2,500, he or she can pay it in full with a timely filed return. If an employer deposited the tax for the year in full and on time, he or she has until February 10 to file the return. 

February 28 – Employers must file 2022 Form 1099-MISC (“Miscellaneous Income”) reporting certain payments to certain persons, along with the related Form 1096 (“Annual Summary and Transmittal of U.S. Information Returns”), and provide copies to recipients. 

March 15 – Calendar-year partnerships and S corporations must file or extend 2022 tax returns. If the return is not extended, this is also the last day

 

If you have any questions, please feel free to ask one of our trusted CPAs! We’re always here to help!

IL Unclaimed Property Rules Update

Is your business subject to Illinois Unclaimed Property rules?

Does your business have employees, customers, or suppliers? If so, you may have an obligation to report and remit unclaimed property to the state of Illinois.

What is the purpose of unclaimed property rules and is this unique to Illinois?

The purpose of unclaimed property rules is to ensure protection of the unclaimed property until the rightful owner is located. All 50 states and the District of Columbia have unclaimed property laws.

What is unclaimed property?

Unclaimed property is intangible personal property for which there has been no owner activity related to that property for a certain period of time. Examples of unclaimed property include uncashed payroll checks, customer overpayments, uncashed/voided checks to vendors, and gift cards/certificates with an expiration date.

How long of a period of inactivity before I need to do something?

The period of inactivity is referred to as the dormancy period. The general rule is that after a 3-year dormancy period the unclaimed property must be reported and remitted to the state. Some property types have different dormancy periods.  For example, the dormancy period for payroll is one year.

I don’t have any unclaimed property. I don’t need to file, right?

This was true until the law recently changed for certain businesses. If your business has annual sales of more than $1,000,000 or more than 100 employees, an unclaimed property report is required even if there is no property to remit to Illinois.

If I need to file a report, how do I do that and when is it due?

Reports must be filed electronically with the Illinois Treasurer. The filing deadline for most businesses is May 1st and is based on unclaimed property held as of 12/31 of the previous calendar year. Business must also reach out to the presumed owner of the property at least 60 days prior to filing the report in an attempt to return the property and/or to inform the presumed owner that the property will be remitted to the state.

What are the consequences of failing to file?

Interest and penalties may be imposed on the failure to file, pay or deliver property by the required due date. Interest may be charged at 1% per month on the value of the unreported/unpaid property. A penalty of $200/day up to a maximum of $5,000 may be imposed until the date a report is filed or the unclaimed property is paid or delivered.

How far back can Illinois go in determining if my business has a liability?

The statute of limitations for the State Treasurer to enforce ends 10 years after property is reported.

What do I do if I have never filed, or I am late on some prior year filings?

Illinois offers a Voluntary Disclosure Agreement (VDA) which allows non-compliant business to voluntarily come forward and become current with their filings. In exchange for voluntary compliance, the state agrees to waive any interest and/or penalties that may have otherwise been due. It’s similar to a free pass in exchange for current and future compliance.

 

If you have any questions regarding unclaimed property, please give us a call. We’re always here to help!

IRS: MO Storm & Flooding Victims Now Eligible for Tax Relief

Storm victims in parts of Missouri now have until November 15, 2022, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance. Currently, individuals and households that reside or have a business in the Independent City of St. Louis, as well as St. Charles, Montgomery and St. Louis counties in Missouri, qualify for tax relief. The same relief will be available to any other locality added later by FEMA.

The tax relief postpones various tax filing and payment deadlines that occurred starting on July 25, 2022. As a result, affected individuals and businesses will have until November 15, 2022, to file returns and pay any taxes that were originally due during this period.

This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until November 15, 2022, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.

The November 15, 2022 deadline also applies to quarterly estimated income tax payments due on September 15, 2022, and the quarterly payroll and excise tax returns normally due on August 1 and October. 31, 2022. Businesses with an original or extended due date also have the additional time including, among others, calendar-year partnerships and S corporations whose 2021 extensions run out on September 15, 2022 and calendar-year corporations whose 2021 extensions run out on October 17, 2022.

In addition, penalties on payroll and excise tax deposits due on or after July 25, 2022 and before August 9, 2022, will be abated as long as the deposits were made by August 9, 2022.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2022 return normally filed next year), or the return for the prior year (2021).

The Missouri Department of Revenue also announced that it will grant the same tax extensions as the IRS to assist Missouri individuals and businesses impact by the recent flooding.  Taxpayers requesting an extension should note the following on their returns when filed: “July 2022 flood extension.”

Note that if you have other state returns to file or payments to make, those deadlines have not been extended.

 

If you have any questions regarding this extension, please give us a call. We’re always here to help!

2022 State of Illinois Tax Rebates

Under the Illinois Family Relief Plan, one-time individual income and property tax rebates will be issued to taxpayers who meet certain requirements. Those who are eligible will receive one of both rebates, which are expected to begin being issued the week of September 12.

As always, if you have any questions, please contact your trusted Scheffel Boyle CPA.

You may also go to Illinois.gov for FAQs and additional resources regarding these 2022 tax rebates.

After filing your taxes, what records can you toss?

If you’ve filed your 2021 tax return, you may want to do some spring cleaning, starting with tax related paper clutter. Paring down is good. Just be careful to hold onto essential records that may be needed in the event of an IRS audit. Some documents may be needed to help you collect a future refund or assist with filing your return next year. Before you start tossing or shredding documents, read the rules to learn what must be kept — for how long — and what can be safely discarded.

The General Rules

At a minimum, you should keep tax records for as long as the IRS can audit your tax return or assess additional taxes. That’s usually three years after you file your return. This means you potentially can get rid of most records related to tax returns for 2018 and earlier years. However, the statute of limitations extends to six years for taxpayers who understate their adjusted gross income by more than 25%. What constitutes an understatement may go beyond simply not reporting items of income. So, to be safe, a general rule of thumb is to save tax records for six years from filing.

Keep Some Records Longer

You need to hang onto some tax-related records beyond the statute of limitations. For example:

  • Keep the tax returns themselves indefinitely, so you can prove to the IRS that you did file a legitimate return. (If you didn’t file a return or if you filed a fraudulent return, there’s no statute of limitations.)
  • Retain W-2 forms until you begin receiving Social Security benefits. That may seem long, but if questions arise regarding your work record or earnings for a particular year, you’ll need your W-2 forms to help provide the documentation needed.
  • Keep records related to real estate or investments for as long as you own the assets, plus at least three years after you sell them and report the sales on your tax return (or six years if you want extra protection).
  • Hang onto records associated with retirement accounts until you’ve depleted the accounts and reported the last withdrawal on your tax return, plus three (or six) years.
  • Retain records that support figures affecting multiple years, such as carryovers of charitable deductions or casualty losses. These need to be saved until they no longer have effect, plus seven years.

If you have any questions, please feel free to contact your trusted Scheffel Boyle team member. We are always here to help!

Second Quarter Tax Calendar

April 18 — Last day to file (or extend) your 2021 personal return and pay any tax that is due.

  • First quarter 2022 estimated tax payments for individuals, trusts and calendar-year corporations are due.
  • 2021 returns are due for trusts and calendar-year estates and C corporations.
  • FinCEN Form 114 (“Report of Foreign Bank and Financial Accounts”) is due — but an automatic extension applies to October 15.
  • Any final contribution you plan to make to an IRA or Education Savings Account for 2021 is due.
  • SEP and profit-sharing plan contributions are also due today if your return is not being extended.

May 2 — Employers must file Form 941 (“Employer’s Federal Quarterly Tax Return”) for the first quarter (May 10 if all taxes are deposited in full and on time). Also, employers must deposit FUTA taxes owed through March if the liability is more than $500.

May 16

  • Calendar-year exempt organizations must file (or extend) their 2021 Forms 990, 990- EZ or 990-PF returns.
  • IRS and State of Illinois extension of individual and business tax returns due for the following counties: Bond, Cass, Coles, Effingham, Fayette, Jersey, Macoupin, Madison, Menard, Montgomery, Morgan, Moultrie, Pike, and Shelby.

June 15 — Second quarter 2022 estimated tax payments are due for individuals, calendar-year corporations, estates and trusts.

 

If you have any questions, please feel free to contact your trusted Scheffel Boyle team member. We are always here to help!

First Quarter Tax Calendar

January 31 — File 2021 Forms W-2 (“Wage and Tax Statement”) with the Social Security Administration and provide copies to employees.

  • File 2021 Forms 1099-NEC (“Nonemployee Compensation”) (paper or electronic) reporting nonemployee compensation payments to the IRS and provide copies to recipients, along with a related Form 1096 (“Annual Summary and Transmittal of U.S. Information Returns”) to the IRS.
  • Most employers must file Form 941 (“Employer’s Quarterly Federal Tax Return”) to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2021. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. Employers who have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944 (“Employer’s Annual Federal Tax Return”).
  • File Form 940* (“Employer’s Annual Federal Unemployment [FUTA] Tax Return”) for 2021. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
  • File Form 943* (“Employer’s Annual Federal Tax Return for Agricultural Employees”) to report Social Security, Medicare and withheld income taxes for 2021. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.
  • File Form 945* (“Annual Return of Withheld Federal Income Tax”) for 2021 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on pensions, annuities, IRAs, etc. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

February 28 — File 2021 Form 1099-MISC (“Miscellaneous Income”) reporting certain payments to certain persons and provide copies to recipients, along with a related Form 1096 (“Annual Summary and Transmittal of U.S. Information Returns”) to the IRS.

March 15* — 2021 tax returns must be filed or extended for calendar-year partnerships and S corporations. If the return isn’t extended, this is also the last day for those types of entities to make 2021 contributions to pension and profit-sharing plans.

 

*Reminder: Due to the devastating storms that took place on December 10, 2021 in the area, both the IRS & the State of Illinois have made an extension of business tax returns to May 16, 2022, for the following counties: Bond, Cass, Coles, Effingham, Fayette, Jersey, Macoupin, Madison, Menard, Montgomery, Morgan, Moultrie, Pike, and Shelby.

 

If you have any questions, please feel free to contact your trusted Scheffel Boyle team member. We are always here to help!