July 2024 / United States

The Financial Crimes Enforcement Network (FinCEN) has released new frequently asked questions (FAQs) specific to companies formed before 1 January 2021. The new guidance is issued in response to inquiries received by FinCEN relating to the Beneficial Ownership Information Reporting Rule implemented by the Corporate Transparency Act (CTA) of 2021.

According to the updated FAQs, the following guidance has been added:

• C. 12. – beneficial ownership information (BOI) reporting requirements do apply to companies created or registered before the CTA was enacted on 1 January 2021, unless specifically exempt or ceased to exist as legal entities before 1 January 2024;
• C. 13. - a company is not required to report its beneficial ownership information to FinCEN if it ceased to exist as a legal entity before 1 January 2024, meaning that it entirely completed the process of formally and irrevocably dissolving;
• C. 14. – a reporting company is still required to submit an initial report if it was created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN; and
• D. 17. – entities fully or partially owned by Indian tribes will report beneficial owners, depending in part on the nature of the entity owned by the Indian Tribe. However, in general, the company must report all individuals who, directly or indirectly, exercise substantial control over the company, as well as individuals who directly or indirectly own or control at least 25% of the company's ownership interests.

The IRS has addressed which entities must apply for registration for the clean fuel production credit. The IRS issued answers to frequently asked questions (FAQs) on 10 July 2024, also discussing whether disregarded entities that produce clean fuel must register under Notice 2024-49, and how claim procedures will work when the registrant is a disregarded entity.

According to the FAQs, each business unit that has, or is required to have, a separate employer identification number (EIN) and is a producer of clean fuel is treated as a separate person for registration purposes. As a result, two related business units that have separate EINs must separately apply for registration using Form 637 if they are each producers of clean fuel.

In addition, the FAQs provide that a producer of clean fuel that is a disregarded entity for income tax purposes is not treated as a disregarded entity for purposes of clean fuel production credit registration. Thus, clean fuel producers that are disregarded entities must separately apply for registration using Form 637.

Moreover, the FAQs state that an owner of a disregarded entity that is registered for the clean fuel production credit, but that is not itself registered, would be able to claim the credit using the registration number of the disregarded entity.

Note:  The Inflation Reduction Act of 2022 (IRA) enacted the Internal Revenue Code section 45Z credit for the production of clean transportation fuels, which would be available from 1 January 2025.

Source: IBFD Tax Research Platform News

The Department of the Treasury and the IRS have published final regulations setting final regulations on required minimum distributions (RMD) for beneficiaries under certain qualified plans. These include IRC section 403(b) annuity contracts, individual retirement accounts and annuities (IRAs), custodial accounts, and certain deferred compensation plans.

The final regulations "generally follow" the IRS's originally proposed regulations issued in 2022, though with several changes in response to comments. Specifically, the IRS reviewed comments suggesting that a beneficiary of an individual who has started required annual distributions should not be required to continue those annual distributions if the remaining account balance is fully distributed within 10 years of the individual's death as required by the SECURE Act (the "10-Year Rule").

However, Treasury and IRS determined that the final regulations should retain the provision in the proposed regulations requiring such a beneficiary to continue receiving annual payments.

The final regulations further:

• raise the starting age for RMDs;
• simplify rules for older beneficiaries;
• require minor child beneficiaries to continue to take annual payments from ages 21 to 31;
• update the spousal IRA rollover rule; and
• provide relief from the multiple beneficiary rule for certain look-through trusts.

The IRS further updated the regulations' application to RMDs beginning 1 January 2025.

Simultaneously, Treasury and IRS issued additional proposed regulations, addressing additional RMD issues under the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act. The proposed regulations addressed additional questions that weren't covered in the final regs regarding the RMD provisions enacted in SECURE 2.0, including outright distributions to trust beneficiaries, spousal elections for spouses to be treated as the deceased employee for distributions, and corrective distributions.

The final and proposed regulations are effective 17 September 2024, with the proposed regulations scheduled for a public hearing on 25 September 2024.