As we approach the close of 2024, the tax landscape continues to evolve with new regulations, court rulings, and updates impacting taxpayers and advisors alike. November brought significant developments, from a push to delay the Corporate Transparency Act to critical tax fraud cases and increased FSA contribution limits for 2025. Whether you’re navigating compliance challenges or planning ahead, staying informed is essential. Let’s break down this month’s top tax highlights and what they mean for you.
CPAs Advocate for Delayed Implementation of the Corporate Transparency Act
With the January 1, 2025, deadline looming, the American Institute of CPAs (AICPA) is pushing for a one-year delay for the Corporate Transparency Act’s reporting requirements. The primary concern? CPAs are concerned as to the risks they may be taking on, which include whether advising clients on the reporting requirements constitutes the unauthorized practice of law.
The Treasure Department’s Financial Crimes Enforcement Network (FinCEN) estimates 32.6 million existing reporting entities, with an additional 5 million expected to comply, yet fewer than 7 million reports have been submitted. Maryland has issued guidance on when filing assistance may require legal expertise, with complexity being the deciding factor. According to the Maryland Attorney General, when filing assistance “requires the knowledge, skills, and training of a lawyer…that assistance may violate the prohibition on unauthorized practice of law.” As reporting requirements approach, it’s crucial for CPAs and advisors to ensure they’re not stepping into legal territory. Please refer to the list of activities that cross that line.
IRS Appeals Process in Focus: $4.2 Million Tax Fraud Penalty Upheld
The 2nd Circuit Court of Appeals recently upheld a $4.2 million tax fraud penalty in the case of Seggerman v. Commissioner (CA2, 10/31/2024, 134 AFTR 2d 2024-5997). This case centers around an inheritance of $24 million received by Henry Seggerman and his family in 2001. Son Henry in August 2013 pled guilty to a conspiracy to defraud the U.S. by hiding more than $12 million of the inheritance for various family members in Swiss bank accounts. He was also charged with filing false individual income tax returns for tax years 2001-2009 and a false Form 706 (United Estate Estate (and Generation-Skipping Transfer) Tax Return), along with aiding and assisting in the filing of fraudulent income tax returns for tax years 2004 and 2006. He pled guilty to all three counts.
While Seggerman was sentenced to six months in prison and ordered to pay approximately $600,000, he also faced a restitution order of $4.2 million, requiring monthly payments of at least 10% of his gross income. Despite his compliance with the restitution schedule, the IRS filed a Notice of Federal Tax Lien (NFTL) for an unpaid balance of roughly $3.5 million related to tax liabilities from 2001. Seggerman challenged the lien, arguing that it conflicted with the court’s restitution order and negatively impacted his financial situation.
The Appeals Office rejected these claims, emphasizing its discretion to act on outstanding tax debts independently of criminal restitution arrangements. The 2nd Circuit Court upheld this decision, stating, “Declining to credit unsupported claims is well within the Appeals Office’s discretion.” This ruling highlights the importance of understanding how IRS enforcement actions, such as liens, can operate concurrently with court-ordered restitution.
Health FSA Contribution Limits Increase for 2025
Good news for employees! Starting in 2025, the Health Flexible Spending Account (FSA) contribution limit will increase to $3,300—$100 higher than the 2024 limit. This adjustment offers employees greater flexibility to allocate pre-tax dollars for medical expenses, helping families better manage rising healthcare costs.
Special Tax Benefits for Military Families
The IRS has issued guidance on tax benefits for military families, including:
- Special treatment for combat pay.
- Combat zone tax deadline extensions.
- Earned Income Tax Credit (EITC) of up to $7,830 for 2024.
- Deductions for unreimbursed moving expenses tied to permanent changes of station.
These provisions aim to ease the financial burdens for military families, offering meaningful support for those who serve.
Kundra & Associates: Your Partner in Tax Law
Navigating the complexities of tax compliance requires expertise and dedication. At Kundra & Associates, we specialize in guiding clients through intricate tax matters, from federal reporting requirements to defending against liens and penalties. Whether you’re a CPA seeking clarity on reporting boundaries, an individual impacted by IRS enforcement actions, or a military family exploring available tax benefits, our experienced team is here to provide tailored solutions. We help people in Maryland, Virginia, and Washington, D.C., as well as internationally,
Stay ahead of tax changes—contact us today at 301-859-0111 or reach out to schedule a consultation. Together, we’ll ensure your tax strategy is as strong and secure as your future.
