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As we move further into 2024, staying updated on the latest tax changes is crucial for tax professionals. In this quarterly tax update for Q3, Jason Dinesen and Nicholas Preusch cover essential topics ranging from recent IRS updates to new tax legislation. This comprehensive summary will help you stay ahead of the curve and equip you with the actionable insights needed to navigate these updates confidently. 

In this blog post, we’ll dive into the key points discussed in the video and break down each topic in an easy-to-understand manner. Whether you're a seasoned tax professional or just starting, you’ll find valuable information to keep you informed. 

What You’ll Learn in This Quarterly Tax Update 

1. ERC Voluntary Disclosure Program 

The IRS has reopened the ERC Voluntary Disclosure Program until November 2024. This program allows businesses to pay back 85% of the claimed ERC. Be sure to check if your clients fall into this category and act accordingly. 

2. Family Management Companies

Many practitioners are discussing strategies like setting up family management companies to save on payroll taxes. However, as discussed, this strategy is fraught with potential pitfalls, including Section 7701(o) economic substance rules. It's crucial to understand the risks involved before advising clients to adopt such strategies. 

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3. S-Corp Disproportionate DistributionsS-Corp Distributions

A recent Tax Court case (Maggard) clarified that disproportionate distributions do not automatically impact S-corp election, but the governing documents play a significant role. This is an essential point for firms managing multiple distributions. 

4. FinCEN BOI (Beneficial Ownership Information) 

FinCEN is actively conducting webinars and issuing updates regarding BOI reporting. It’s important to understand how these updates affect tax compliance, especially concerning exemptions and ownership structures. 

5. Government Shutdown & Tax Implications 

Though a shutdown was averted, it’s important to keep an eye on possible tax-related consequences in the coming months. 

ERC: Who Are Related Individuals? 

The IRS has clarified the rules around related individuals concerning ERC. This clarification includes family members such as children, parents, siblings, and in-laws. For businesses claiming the ERC, this update provides critical guidance on how to avoid misclassification and non-qualified wages. 

S-Corp Distributions: What You Need to Know 

S-Corps must avoid disproportionate distributions to maintain their tax status. The IRS has provided new guidance, clarifying that these distributions, while problematic, do not always disqualify an S-election. This update should prompt businesses to review their governing documents and ensure they are compliant.

IRS Warnings: SE Credit and Clean Energy Scams 

The IRS has issued several warnings about scams targeting taxpayers and tax professionals alike. Two notable scams include the "SE Credit Scam" and the "Clean Energy Credit Scam." The former promises large refunds based on the "self-employment tax credit," while the latter falsely claims clean energy credits under the Inflation Reduction Act. As professionals, it's critical to be vigilant and educate clients about these scams. 

Key Takeaways from the Q3 Monthly Tax Update 

Here are the key insights from the Q3 Monthly Tax Update of 2024: 

  • ERC Voluntary Disclosure Program: Open until November 2024. Businesses can repay 85% of claimed ERC. 
  • Family Management Companies: Risky strategy for payroll tax savings. Watch out for Section 7701(o) rules. 
  • S-Corp Disproportionate Distributions: Review governing documents for compliance. 
  • FinCEN BOI Reporting: Stay updated on FinCEN’s webinars and BOI requirements. 
  • IRS Scam Alerts: Watch for scams targeting SE credits and clean energy credits.

Conclusion

At MY-CPE, we understand that staying updated on tax regulations and changes can be overwhelming. That’s why we provide tax professionals with comprehensive, up-to-date resources to ensure they remain compliant and informed. By reading this post, you’ve gained a solid understanding of Q3's tax updates and how they might affect your clients. 

To learn more and access expert-led courses on the latest tax updates, visit MY-CPE today. Our courses are designed to fit your schedule, offering flexibility and ensuring you meet your CPE requirements efficiently.

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Report the scam to the IRS and advise your clients to be cautious of unsolicited offers that promise large refunds or credits.

FAQs

The ERC Voluntary Disclosure Program allows businesses to pay back 85% of the claimed Employee Retention Credit. It is open until November 2024.

Disproportionate distributions refer to distributions made unevenly among S-Corp shareholders. While these are generally discouraged, the IRS clarified that governing documents play a critical role in maintaining S-Corp status.

The IRS has warned about SE Credit scams and Clean Energy Credit scams. Both of these are targeting self-employed individuals and businesses through false claims of refunds and tax credits.

Jason Dinesen

Jason Dinesen

President, Dinesen Tax & Accounting, P.C.

Jason (LPA, EA) is a seasoned tax expert, entrepreneur, and educator with over 18 years of experience in accounting, tax preparation, and business advisory. As the founder of Dinesen Tax & Accounting, P.C., he helps professionals understand complex tax concepts. A leading CPE presenter at MYCPE ONE, Jason has trained more than 200,000 professionals on tax updates, ethics, and IRS guidance. Known for his sharp insights and relatable teaching style, he helps CPAs, EAs, and finance professionals stay up to date and confidently navigate evolving tax laws.

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