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FinCEN identifiers were finalized on November 8, 2023. As reported in previous publications, entities must report specific information regarding their Beneficial Ownership interest. 

 

Since the summer of 2023, the IRS has been significantly expanding its transfer pricing enforcement through increased staff and data analytics. U.S. taxpayers should thoughtfully evaluate potential weaknesses in their positions and consider how they can bolster transfer pricing documentation and background support.

On September 29, 2023, the Brazilian Federal Revenue (RFB) published Normative Instruction 2,161 (NI 2,161/23), introducing new transfer pricing rules that align the country with international standards. This is a significant development that will reshape the corporate landscape in Brazil.

 

On Microsoft’s 8-k published in early October, they’ve noted that the IRS has issued a notice of adjustment and is due $26.9 Billion in taxes, plus penalties and interest.

 

The transfer pricing area of international taxation is becoming more and more complex. Specifically, transfer pricing supports the pricing of goods and services between companies and subsidiaries, which are commonly controlled.

 

On September 18, 2023, FinCEN issued a compliance guide to help small businesses report beneficial ownership.

 

The IRS has announced that it is shifting its focus on compliance enforcement from working-class taxpayers to wealthy taxpayers. This decision is an effort to close the tax gap, which is the difference between the amount of taxes that are owed and the amount of taxes that are actually paid.

 

In the August 30 FATCA News & Information Newsletter, the IRS has offered guidance on recommended procedures for withholding agents who are submitting Form 1042, the Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.

 

Over the past years, U.S. reporting of foreign operations has become increasingly complex and rapidly changing. Specific compliance rules and requirements often do not have clear guidance and can cause CPAs to stay up at night. As you may be aware, significant penalties can be assessed for failure to report or incomplete filings.

The foreign tax credit is a non-refundable tax credit implemented by the United States to ease the burden of double taxation for taxpayers with tax liabilities in other countries. It’s an important item to consider when developing a firm’s international strategy.

 

FinCEN Issues Final Rules for the Use of Identifiers When Reporting Beneficial Owner Information

Note: This blog provides important information on the Corporate Transparency Act (CTA) compliance; however, a more up-to-date analysis is available. For the latest updates and insights, please refer to our most recent blog.

The Corporate Transparency Act was established in 2021, authorizing FinCEN to collect certain types of Beneficial Ownership Information (BOI) from corporations, partnerships, LLCs, and similar entities. For an additional review of the FinCEN reporting requirements as enacted by the Corporate Transparency ACT, read our blogs on the regulation and additional guidance.

FinCEN identifiers were finalized on November 8, 2023. As reported in previous publications, entities must report specific information regarding their Beneficial Ownership interest. 

Reports should include the following information on owners:

  • Name
  • Date of birth
  • Address
  • A distinctive identifying number alongside the relevant jurisdiction of issuance of an acceptable identification document

According to FinCEN’s Small Entity Compliance Guide, FinCEN will issue a FinCEN identifier to an individual or reporting entity after the above reporting information has been submitted in a BOI report. Once obtained, entities can use the Identifier number in lieu of submitting the full set of information in subsequent years. This allows for streamlined BOI reporting for the years after.

FinCEN is a separate reporting agency from the IRS that historically only required compliance from businesses with foreign assets. Several companies with no international business will now need to report to FinCEN for the first time, which may be frustrating and confusing for many small businesses. If you have any questions regarding FinCEN or other International business matters, please contact our Global Business Services team.

Greg Lambrecht, CPA, is a Shareholder in the firm’s Global Business Services practice and advises clients on international tax matters including understanding the consequences and opportunities associated with global tax planning decisions. He also assists clients in managing increasingly complex compliance requirements of companies with international operations.

Lambrecht joins McGuire Sponsel from the Big Four with over a decade of experience leading complex international tax projects for Fortune 150 clients and over 20 years of total experience in international tax.

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