Student Loan rules are changing

Mike Sylvester • August 30, 2023

Student Loan Payments Restart in October 2023


If you have student loans you should read this carefully. Per the Congressional Budget Office (CBO) 2/3 of those with student loans should apply for the new income-driven repayment plans.


Due to the Covid pandemic, student loan payments have been paused since March of 2020 and no interest has accrued. Interest starts accruing again September 1st, 2023, and payments will begin again in October of 2023. There will not be another delay in monthly payments.


Here is what you should do:


Update your contact info on studentaid.gov and your loan servicer’s website.


Look into the new income-driven repayment plans (SAVE plans). You could get a much lower payment by applying for the new income-driven repayment plans. You can find more information here.  You can choose between the fastest payoff, lowest monthly payment, and lowest total paid.  Note this is discussed a lot; further in this article.


Consider enrolling in autopay. Enrolling in autopay will save you 0.25% on your interest rate. You can sign up on your loan servicer’s website.


Check your loan servicer’s website for your payment amount.  Some have payment information available now.


The new SAVE plans (Income-driven repayment plans) are extremely generous as compared to the old plans!


Parent loans do not qualify for the SAVE plans, and this is another reason to not take out parent loans. Private loans do not qualify for the new SAVE plans.


SAVE plans for undergraduate loans span 20 years unless the July 2024 changes apply to your smaller loan. SAVE plans for graduate loans span 25 years.


Remember, a normal student loan repayment plan spans only 10 years, this must be considered…


Benefits that start for SAVE plans now include:


The amount of income protected from payments increased from 150% of the poverty line to 225% of the poverty line. The following amounts in 2023 are excluded from income based on family size under the new rules:

Individuals           $32,805

Family of 2          $44,370

Family of 3          $55,935

Family of 4          $67,500

Note the Department of Education expects well over a million student loan borrowers will see their payments under the SAVE plan go to zero. 


If the minimum monthly payment is paid, and if it does not pay all of the interest accrued that month, the interest will not accrue and will not be added to the loan balance. The Department of Education feels this will benefit 70% of the borrowers in the current income-driven repayment plans.


Married borrowers who file their taxes separately (MFS) will no longer be required to include their spouse’s income in their payment calculation for the new SAVE program. These borrowers will have their spouse excluded from the family size calculation.  Note this will cause more taxpayers to file married filing separately rather than married filing jointly.


Starting July of 2024 more changes will be implemented:


Payments on undergraduate loans will be cut from 10% of remaining income to 5% of remaining income. This is a huge deal.


Borrowers whose original principal balances were $12,000 or less will receive forgiveness after 10 years of repayment, with an additional year of repayment required for each additional $1,000 borrowed.  So those borrowers with $23,000 or less in undergraduate student loans will have a repayment period of less than 20 years and this is a big deal as well.


Borrowers are in a temporary “on-ramp transition period” until September of 2024. This means that payments are still due, and interest will continue to accrue, but you will not be reported as delinquent to credit agencies.  Further; all student loan borrowers have been given a completely fresh restart and can apply for the new SAVE plan regardless of delinquency status.


Under current law, unpaid student loan balances that are forgiven by the Federal government are taxable income starting on 1/1/2026. Each State handles this differently.  


Note the new SAVE income-driven repayment plans are so generous that the Congressional Budget Office (Nonpartisan budget arm of Congress) projects:


The number of Americans in income-driven repayment plans will increase to 66% of all borrowers from 50%. 


The CBO expects the program to cost about 26 billion dollars a year for the next ten years and for the cost to increase after that. This is because the CBO expects those borrowers who use the new SAVE program to only repay 61% of the amount borrowed; under previous plans, the CBO projected 110% of the amount borrowed would be repaid due to interest. Think about this! This will cost the Federal Government hundreds of billions of dollars and it will save borrowers the same amount!


Further, the CBO expects colleges to increase costs more than they are now since students will not have to repay the full amount.


The CBO also expects students to borrow more in the future since 2/3 of borrowers will only have to repay 61% of what they borrow under the new SAVE plans. The CBO projects 2/3 of borrowers to sign up and benefit from the SAVE plans.


Who should sign up for the new SAVE plans? It is extremely complicated and the following variables are some of the variables that must be considered: What will your income be over the length of the SAVE plan? What will your family size be over the life of the SAVE plan? Can you write off student loan interest on your income tax returns? What is the interest rate on the student loans? If you are married, will you be filing jointly or separately and you also have to consider what those different filing statuses will mean to each tax return filed and the cost to file those tax returns. If married, does your spouse have student loans? How much will the Federal poverty limit change. Will how AGI is calculated change? Anything that affects your AGI over the life of the SAVE plan must be considered including, side jobs, business income, rental income, accelerated depreciation, capital gains, capital losses, interest, dividends, taking taxable retirement distributions and on and on.


In very general terms, I think the following situations likely mean you should strongly consider signing up for the SAVE plan:


Anyone already on another income-driven repayment plan.


Anyone currently in default or forbearance since if you are financially struggling you might have zero or very low monthly payments.


Anyone who just cannot pay the normal 10-year repayment plan amount. Note in some situations this may cause you to pay more if you sign up for a SAVE plan!


The undergraduate SAVE plans are much better than the graduate SAVE plans. This means more with undergraduate loans will benefit from choosing a SAVE plan.


This is extremely complicated and best shown with examples:


Susan graduates from college with an undergraduate degree in July of 2024. Her student loan repayments begin in January of 2025. Susan has a student loan balance of $30,000 in January of 2025. At current student loan interest rates, if Susan does not apply for an income-driven repayment plan; her student loan payments are $326 a month for 10 years. Let’s assume Susan is paid $59,000 in wages in 2025. 


Susan applies for a SAVE plan. Susan is an individual and she has no children. She is a family of one. 225% of the Federal poverty level for an individual will be about $35,000 in 2025. Under the Save plan Susan’s monthly payment is Susan’s Adjusted Gross Income (AGI) of $59,000 minus poverty limit of $35,000 = $24,000. $24,000 divided by 12 means Susan has $2,000 per month of discretionary income. $2,000 x 5% = $100. Susan will pay $100 a month 2025. Note Susan saves money on monthly payments in 2025 by signing up for a SAVE plan in this example.


Susan’s financial situation will change every year. Her income as reported on her 1040 will change. Her family size might change. Inflation will change the Federal poverty limits. This means Susan’s student loan payments will change annually under the SAVE plan.  The more borrowers earn, the higher amounts the SAVE plan will make them pay every month. The SAVE plan will benefit low- and middle-income borrowers a lot. The SAVE plan will benefit high-income borrowers significantly less and often not at all.  Remember, the SAVE calculation is made annually and will change every year.


Susan summary:


Susan can pay $326 a month for ten years and she might be able to write off the student loan interest on her personal income tax returns.


OR


Susan can sign up for a SAVE plan, pay $100 per month for 2025, recalculate the payment annually for the next 20 years, and then have debt forgiveness income on the balance remaining when forgiven that may or may not be taxable to the Federal Government and the state, she lives in.


Next example.


Tonya graduates from college with an undergraduate degree in July of 2024. Her student loan repayments begin in January of 2025. Tonya has a student loan balance of $30,000 in January of 2025. At current student loan interest rates, if Tonya does not apply for an income-driven repayment plan; her student loan payments are $326 a month for 10 years. Let’s assume Tonya is paid $107,000 in wages in 2025.  She is a computer science major.


Tonya applies for a SAVE plan. Tonya is an individual and she has no children. She is a family of one. 225% of the Federal poverty level for an individual will be about $35,000 in 2025. Under the Save plan Tonya’s monthly payment is Tonya’s Adjusted Gross Income (AGI) of $107,000 minus poverty limit of $35,000 = $72,000. $72,000 divided by 12 means Tonya has $6,000 per month of discretionary income. $6,000 x 5% = $300. Tonya will pay $300 a month 2025. Note Susan saves $26 a month on monthly payments in 2025 by signing up for a SAVE plan in this example.


Tonya’s choice is much simpler that Susan’s choice. Paying $326 a month for ten years is generally going to be a better choice and Tonya very likely should not sign up for a SAVE plan.


The final section is a broad overview of the politics and ramifications of the SAVE plans. Most people (Not all) think this plan will survive challenge at The Supreme Court.

 

Winners:


President Biden and Democrats. They wanted to lower the student loan burden for low- and middle-income individuals with undergraduate student loans and this program will accomplish that.


Colleges, they will be able to charge even more for the same services per the non-partisan CBO.


Student loan borrowers that are lower and middle income. Those who sign up for the SAVE plans will repay 61% of what they borrowed rather than 110% under current rules per various studies.

 

The economy in the short run. As many as 30 million borrowers will see lower monthly student loan repayments, largely this means they will spend the money on other things and which helps the economy in the short run.


Private colleges. They already charge a lot more than public colleges and students who graduate with a lot of undergraduate debt and are lower or middle income will have a lot more of their student loan debt forgiven.


Losers:


Taxpayers, this adds 261 billion to the deficit over the next ten years and the CBO projects that to increase in following years. 

Student loan borrowers who paid off their debt in full under the old rules.


The military; because this makes the GI Bill a little less valuable.


Current and future student loan borrowers who are high income since they will have to repay the normal 110% of the amount borrowed.


The economy in the long run. The Federal Government already is on an unsustainable path per the CBO and this makes that path a little worse.


Further increasing the future cost of college helps no one other than colleges.


Our clients can hire us to do a consulting engagement to determine if someone should sign up for SAVE plans or not. If you want to hire us to do this; please send your CPA an email and let us know all of the following in one email:


That you want us to help you determine if someone should sign up for a SAVE plan or not.


Who the calculation is for.


How much they have in undergraduate student loans rounded to the nearest thousand dollars.


How much they have in graduate student loans rounded to the nearest thousand dollars.


Please verify the loans are NOT parent loans or private loans.


These five items will get us started!


Mike Sylvester, CPA


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Tax Season Hours

February 1, 2025
Tax Season hours at SBS CPA Group (Feb 2 nd -April 15 th ) Monday thru Friday 8:30am to 6:00pm Saturday 9:00am to 4:00pm

Tax Season is here!

January 31, 2025
Tax season is here! We’re ready to start filing returns and need your documents all at once . Please provide: Your completed tax planner All source documents How to Send Your Documents Please choose one method: ✅ TaxDome – Upload all documents, name them , and click “done uploading” so we know you're finished. ✅ Drop off – Bring them to our office. ✅ Mail – Send them to our office. ✅ Email – Send everything to your CPA. Why Use TaxDome? If you activate your TaxDome account, you can: ✔️ Download copies of your tax returns ✔️ Upload documents easily ✔️ Sign returns electronically (if both spouses have emails on file) Important: TaxDome emails come from notifications@taxdome.com . If you didn’t get an invitation, check your spam folder. Still no email? Contact Nikkie Reyes at admin@sbscpagroup.com or call 260-407-5000 . We look forward to another great tax season!  SBS CPA Group Team

Health Care Sharing Ministry

January 26, 2025
Starting in 2024, members of qualifying health care sharing ministries will be able to deduct their health care sharing expenses on their Indiana tax returns. Qualified health care sharing expenses are defined as the amount paid by a qualified individual for membership in a health care sharing ministry. You must be a resident of Indiana and have been a member of a health care sharing ministry for at least a month during the year to receive the deduction. But what is a health care sharing ministry? A health care sharing ministry is a type of nonprofit organization where members share healthcare expenses based on mutual faith and commitment. It is not insurance-members help cover each other's medical costs. While they can be quite beneficial, they also have drawbacks. If you are considering switching to a health care ministry, do your research to decide if it is right for you.  Let your tax preparer know if you are a member of a health care sharing ministry. Keep track of your qualified health care sharing ministry expenses and make sure you give them to your tax preparer, along with all of your other documents, at tax time. Jennifer Thonert, CPA

Indiana Military Pay

January 25, 2025
If you are an active member of the military, get ready to pay less state income tax to Indiana. Starting in 2024, Indiana will no longer tax any active-duty military pay. In prior years, Indiana would allow up to $5,000 of active military pay to be non-taxable, but a new law has passed making the entire amount exempt for those that qualify. To qualify, you must be a resident. To make sure you are considered an Indiana resident, confirm the following to be true: 1) Indiana is listed as your “home of record” on your military documents. 2) A DD Form 2058 is on file saying Indiana is your legal residence. 3) Your permanent address with the military is an Indiana address. 4) You have a current Indiana driver’s license. 5) You are registered to vote in Indiana. 6) You file an Indiana tax return. 7) You have ties to Indiana, such as a bank account. Once you determine that you are a resident, the next step is to file an Indiana tax return. Even if it is the only income you have, you must still file the return in order to claim the exemption. You do not have to attach proof to the return that you have active-duty status, but you are required to substantiate it if it ever gets called into question. Keeping a copy of your orders is advised. Also, make sure at tax time that your tax preparer knows you qualify for this exemption. Jennifer Thonert, CPA

Indiana Income Tax Free Nonresident Employee Wages

January 24, 2025
Are you someone, or do you have an employee, who is not from Indiana but works here for short periods? Beginning in tax year 2024, Indiana has an income tax exemption for some nonresident employees. If they work in the state for 30 days or less, the state of Indiana will not collect income taxes on their wages. Employers do not need to withhold state income tax from these employees. However, it is only a state exemption-not a local one-so local income taxes will still need to be withheld, if applicable. In order for the nonresident to qualify for the exemption, the following circumstances must be met: 1) They must have been a nonresident for the entire year. 2) They must have worked in Indiana for 30 days or less. A workday counts as an Indiana workday if more than 50% of the hours that were worked that day were in Indiana (transit time does not count in the calculation). 3) They must not have the following professions: professional athlete, professional entertainer, or public figure that gets paid per event. These professionals will still be subject to income tax no matter how many days they work. Anyone who is exempted does not have to file an Indiana tax return, unless their employer withheld Indiana income tax. In that case, a tax return will need to be filed to get a refund. If the employee happens to cross the 30-day threshold, their entire year’s Indiana income then becomes taxable to the state, unless they are residents of a reciprocal state. Indiana has reciprocal tax agreements with six states: Illinois, Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. People who live in those states but work in Indiana already do not pay Indiana state taxes, so the new rule does not affect them.  Make sure to let your tax preparer know if you are, or have, one of these employees.

Indiana Attainable Homeownership Tax Credit

January 16, 2025
In 2023, Indiana introduced the Attainable Homeownership Tax Credit, which is designed to encourage contributions to affordable housing initiatives in Indiana. If you are looking to contribute to a meaningful cause, while benefiting from a significant tax incentive, this credit could be a fantastic opportunity. Currently, the only organization approved by the Indiana Economic Development Corporation (IEDC) to receive credit-eligible contributions is Habitat for Humanity of Indiana (including its local affiliates). The tax credit equals 50% of your contributions to Habitat Indiana, with a maximum credit of $10,000 per taxpayer per year. For married couples filing jointly, the maximum credit is also $10,000 per couple. Contributions can include cash, checks, stocks, and bonds. These contributions are valued at their fair market value at the time of the donation. The value of services, labor, or reduced-cost equipment is not eligible for the credit. To claim the credit, Habitat Indiana will provide a certifying number (PIN) that must be listed on Schedule IN-OCC. The program has an annual statewide credit cap of $4 million per fiscal year (July 1 – June 30). Credits are allocated on a first-come, first-served basis, based on when returns are received. If the annual cap is reached, any credits claimed afterward will be permanently disallowed, though carryovers will remain valid. Credits are limited to your Indiana state tax liability after applying other nonrefundable credits. For example, if you qualify for a $10,000 credit but your state tax liability is only $8,000, the unused $2,000 can be carried forward to future years. This tax credit is a win-win: it supports Habitat Indiana’s mission to provide affordable housing while offering a substantial incentive for taxpayers. Whether you are an individual, a couple, or a business, contributing to this program can make a meaningful impact on Indiana communities. If you are considering contributing to Habitat for Humanity of Indiana, ensure your donation meets the eligibility criteria and plan to claim the credit promptly to avoid missing out due to the annual cap. For further questions about the Attainable Homeownership Tax Credit, feel free to reach out to the partner in charge of your account. Thank you for reading!  Nathan Skinner

Happy Holidays from SBS CPA Group

December 20, 2024
SBS CPA Group will be closed Dec. 24th thru Dec. 26th, allowing our staff time to spend with family. We will also be closed New Year Day, Jan. 1st.

How to Review and Understand Your Social Security Benefits

By Mike Sylvester • December 18, 2024
Social Security: A Vital Program for Americans Social Security is a cornerstone of the United States' social safety net. Many Americans depend on this program to fund their retirement. The most recent data available from the Social Security Administration highlights the program's critical role in retirement planning. Social Security benefits account for approximately 30% of the income for individuals ages 65 and older. This aligns with the program’s original intent in 1935. Retirement income was envisioned as a three-legged stool consisting of pensions, personal savings, and Social Security, each contributing one-third. It was never intended to serve as the primary source of retirement income. Unfortunately, reliance on Social Security has increased significantly: 51.8% of individuals ages 65 and older depend on Social Security for half or more of their income. 24.7% of people in this age group rely on it for 90% or more of their income. Income Quintile Reliance on Social Security The extent of reliance varies significantly by income quintile: 1st Quintile (lowest 20% of taxable income): 86.6% depend on Social Security for at least half their income. 64.1% rely on it for 90% or more. 2nd Quintile: 82.3% depend on it for at least half. 47.8% rely on it for 90% or more. 3rd Quintile: 62.7% depend on it for at least half. 13.8% rely on it for 90% or more. 4th Quintile: 24.8% depend on it for at least half. Only 1% rely on it for 90% or more. 5th Quintile (highest 20% of taxable income): 2.2% depend on it for at least half. None rely on it for 90% or more. Challenges Ahead The program faces significant challenges. Without reform, Social Security will not be able to pay full benefits by 2035. This presents a critical issue for Congress, as reductions in benefits are politically and socially untenable. Understanding Social Security Benefits Despite its importance, many people are unaware of how their Social Security benefits are calculated. Since the SSA ceased mailing statements in 2011, individuals must proactively set up an online account to access this information. The benefit formula is intentionally progressive, favoring lower-income earners by replacing a higher percentage of their income. For higher-income earners, Social Security becomes less significant as a percentage of their total retirement income. Key Components of Benefit Calculations Credits: To qualify, individuals must earn 40 credits. In 2024, one credit is earned for every $1,730 in wages, with up to four credits given annually. Average Indexed Monthly Earnings (AIME): The AIME figure is based on a worker's 35 highest-earning years, adjusted for inflation. If fewer than 35 years of earnings exist, zeroes are averaged in. Primary Insurance Amount (PIA): This is the monthly benefit a person receives at full retirement age. PIA is calculated using a formula adjusted annually for inflation. An Example Calculation for 2024 For a retiree with an AIME of $6,000: 90% of the first $1,174 = $1,056.60 32% of the amount between $1,174 and $6,000 = $1,544.32 Total PIA = $2,601 (before Medicare premiums). Planning Considerations To optimize benefits: Aim for an AIME of at least $1,174, as the first tier yields a 90% replacement rate. Understand that amounts above $7,078 are replaced at only 15%. Reviewing your lifetime earnings is crucial to ensure accuracy. Errors are far easier to correct early on than later on, when reconstructing decades-old income records may be challenging. Social Security and Income Taxation Since 1983, up to 85% of Social Security income has been subject to federal taxes, depending on other income sources. This makes the program more progressive but also adds complexity to retirement planning. Strategic Decision-Making When to begin drawing Social Security benefits is a critical decision, particularly for married couples. Starting benefits early results in reduced monthly payments, while delaying up to age 70 increases them. Careful analysis and planning are essential to maximize long-term benefits. Conclusion Social Security remains a vital program for most Americans. Understanding its mechanics and planning effectively can significantly impact retirement security. Set up your Social Security account today to review your earnings and plan for the future.

Year-Round Tax Planning Can Help You Avoid Costly Errors

By Mike Sylvester • December 18, 2024
Year-Round Tax Planning Can Help You Avoid Costly Errors The federal tax code is extremely complicated and difficult to understand. Each state (and the District of Columbia) with an income tax has its own tax code. These tax codes change most years, and retroactive tax changes have become more frequent. The difficulty of the tax code makes year-round tax planning essential. I have been preparing U.S. income tax returns for 20 years. I have filed returns in at least 30 states and the District of Columbia. I have signed more than 7,000 federal income tax returns and a similar number of state income tax returns. I enjoy researching the income tax code and preparing income tax returns. What breaks my heart is performing what I call a "tax autopsy." This is when a client commits an unforced error and does something with major tax consequences that an accountant discovers only when preparing the person’s income taxes for the prior year. For many Americans, and a strong majority of my clients, income taxes are the single highest expense they have over their lifetime. Tax planning involves minimizing the income taxes you owe over your lifetime in a legal and controlled fashion. It’s a year-round activity that is separate from completing and filing your annual income taxes. Proper tax planning eliminates surprises as well as underpayment penalties and interest. Across the couple of tax autopsies I do every year, in each case, the taxpayers likely would have benefited from discussing the matter with a professional to ensure they understood the tax ramifications of the event or events in question. The Consequences of Tax Autopsies Tax autopsies often result in a large amount of income tax being owed, and the amount owed is often unexpected. This can cause stress and angst. It may also cause financial hardship. In some cases, it can lead to underpayment penalties and interest. In the worst cases, liens and levies can be put into place by taxing agencies. The key to avoiding tax autopsies is communication. The tax code is so complicated, and it changes so often, that few people have a strong understanding of how income taxes are calculated. Events That Require Tax Planning There are many different items taxpayers should discuss with professionals. Examples include: Retirement, which can create issues due to lack of withholding Retirement distributions Roth conversions Selling a property with a taxable gain Bonuses Equity compensation Gains realized from the stock market or cryptocurrency Legal settlements in certain circumstances Profits from one or more businesses One item that can create a serious tax autopsy for lower-income families is worth a longer discussion. The Centers for Medicare & Medicaid Services (CMS) is the federal agency that provides health coverage to more than 160 million people through Medicare, Medicaid, the Children's Health Insurance Program, and the Health Insurance Marketplace. Per CMS, in February 2024, 20.8 million people received health insurance through the Marketplace. In February 2024, 19.3 million Marketplace enrollees—or 93% of total Marketplace enrollees—received Advanced Premium Tax Credits (APTC). When enrollees sign up for Marketplace coverage, generally between November 1 and December 15 of the prior year, the enrollee must estimate income (known as Modified Adjusted Gross Income or MAGI) for the next calendar year. This is extremely challenging. For example, people signing up today are estimating their 2025 MAGI, and their actual 2025 MAGI will not be known until the 2025 income tax returns are filed in 2026. The federal government directly pays a portion of the monthly premium for the 93% of enrollees who choose to get the advanced subsidies based on the enrollee’s MAGI estimate. When the enrollee’s income tax returns are filed, their actual MAGI is calculated, and the subsidy is reconciled on the Form 1040. You can change your estimated income throughout the year through the Marketplace. If the enrollee’s MAGI is less than the estimated amount given to the Marketplace, life is good. The taxpayer was not paid enough APTC, and they will get credit for this underpayment on the Form 1040. The worst case is when a taxpayer’s MAGI is higher than the estimated amount they provided to the Marketplace. This means the enrollee received too much money in subsidies, and this amount is added to that person’s federal tax liability in most cases. In this situation, the tax autopsy happens when the enrollee has more taxable income than previously estimated. This can happen for a wide variety of reasons. Beyond what was mentioned earlier, the one I see most often in this circumstance is taxable retirement distributions. The amount of money that must be repaid depends on the exact circumstances; however, I have seen quite a few taxpayers have to repay several thousand dollars in subsidies they were not due. This is difficult because taxpayers who receive health care subsidies are low-income taxpayers. Year-round tax planning can help prevent tax autopsies and save taxpayers a significant amount of their hard-earned money!

Beneficial Ownership Reporting Requirements

By Mike Sylvester • December 18, 2024
Beneficial Ownership Reporting Requirements The Financial Crimes Network has put the Corporate Transparency Act (CTA) on hold following a ruling by a Federal judge in Texas. Despite this, filings are still being accepted. As of now, companies are not required to: File an initial report, which was originally due by January 1, 2025, for companies formed before January 1, 2024. Moving forward, file an updated report within 30 days if the beneficial owners change, move, or if the company relocates. Companies formed in 2025 were going to be required to file their initial report within 30 days of formation. Legal Uncertainty and Appeals The Financial Crimes Network is appealing the decision, and there are now court cases in multiple Federal jurisdictions. This issue may ultimately be decided by the Supreme Court. Further, in the last 24 hours, it looks like Congress might delay the reporting requirement for companies formed prior to January 1, 2024, by a year. In short, this is a mess. Client Requirements Despite the current uncertainty, all of our clients will be required to: Sign and date an engagement letter, choosing to opt into or opt out of us providing this service. Our Position We believe there is a strong possibility that the Corporate Transparency Act will be upheld, requiring companies to comply with the law. However, we will not know for certain until the pending court cases are resolved. If the law is reinstated, there is no clear guidance on how long firms will have to become compliant. All of our clients who require an updated report or an initial report will meet with Brent Bracht, CPA, and opt into or out of us providing this service. Clients will fill out the paperwork so we can file the forms depending on the outcome of the various court cases. Additionally, we are uncertain how the incoming Trump Administration and Congress will handle this matter. Penalties for Non-Compliance If compliance is ultimately required, the penalties for non-compliance include: Civil penalties of $591 per day, up to a maximum of $10,000. Criminal penalties of up to an additional $10,000 in fines and up to 2 years imprisonment. Client Options Clients have two options: Opt into us handling the service, and we will file the required forms now. Opt out of this service and handle the reporting requirements independently. We are here to provide support and ensure compliance should the law be upheld.
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