Why Form 8821 Matters Now More Than Ever

Tax Compliance

This year’s tax season is well underway and the IRS is in full swing of processing returns. In fact, this year, they’re working through 8.1 million unprocessed returns, and the tax season is only half over. For businesses filing with an authorized accounting service, including 3Sixty Advisors, one of the easiest ways to streamline returns is by filling out tax information authorization Form 8821. 

What Exactly is Form 8821?

In short, Form 8821 is a one-page tax document that is necessary for accounting services, including 3Sixty Advisors, to be able to file your business tax returns and track your payment status. 

According to the IRS, “Form 8821 authorizes any individual, corporation, firm, organization, or partnership you designate to inspect and/or receive your confidential information verbally or in writing for the type of tax and the years or periods you list on Form 8821.” 

Of note: Form 8821 does not grant power of attorney rights including speaking to the IRS on your behalf, executing waivers or closing agreements, or any other representative matters. For those additional allowances, you’ll want to talk with the 3Sixty Advisors team and consider filing Form 2848. 

Why File Form 8821?

Form 8821 helps 3Sixty Advisors in a multitude of ways including:

  • Receiving your transcripts, account information, and payments made to an account. As a tax credit partner, this allows us to get a full picture of your tax information. We’ll be able to review your transcripts, account information, payments made to an account and work with you for the best solutions and next steps.
  • Receiving copies of IRS notices before they’re sent to you. This lets us get a jumpstart for resolving any issues one or more days before you receive those same IRS notices in the mail.
  • Save time with team collaboration. This lets our team work together without requiring individual allowances. You’ll be able to save time by filling out one form and we’ll be ready to collaborate to deliver optimal results with minimal disruption for you or your business.
  • Peace of mind. Unlike Power of Attorney Form 2848, Tax Information Authorization Form 8821 automatically expires. This allows 3Sixty Advisors to work with you on your taxes while not requiring specific revoking actions.

Form 8821 gives 3Sixty Advisors the ability to complete your IRS tax paperwork and track your payment status. 

How Do I Get Started?

Form 8821 and instructions can be found on the IRS website, but the 3Sixty Advisors team goes a step further. We take the guesswork out of deciphering tax form instructions and ready forms for clients. Operations Manager Brittany Perez says, “We actually fill out the whole form, their EIN, address, business name, etc. All our clients need to do is print, sign, and mail it back into our firm.”

Once 3Sixty Advisors receives the completed form, we file it directly with the IRS and get to work delivering human resources and technology-enabled services for our clients.

How 3Sixty Advisors Can Help

At 3Sixty Advisors, we’ve helped thousands of customers file. We know how to get things rolling quickly without adding more to your business tasks. Uncover answers to your most pressing questions on our homepage, 3Sixty Advisors.

Take the Next Step

Ready to get started? Contact a 3Sixty Advisors professional today to take the next step. Our done-for-you model means we submit the application with you to the bank.

Business Bookkeeping Best Practices for Your Tax Documents

Whether you’re just starting to launch a small business or have been at it for years, bookkeeping is an essential component. But for many, numbers and finances are daunting, and relying solely on software could leave gaps where you’ll want to know what’s entirely there. This past year, questions about taxes have been on the rise. There’s been a 140% increase in Google searches for business tax preparation and a 50% increase in small business bookkeeping. As a result, businesses are looking for answers to bookkeeping questions. 

 

So we’re delving into the top questions about bookkeeping for getting your tax documents in order this year. 

 

Are Bookkeeping and Accounting the Same Thing?

Not exactly, but they do work with one another. Bookkeeping records and tracks business financials for all transactions, operations, and other events relating to the business. Accounting is the measurement, processing, and communications about bookkeeping. Think of it this way – Bookkeeping looks back on the business specifics and accounting looks forward to projecting trends and other financials from bookkeeping records. 

 

Why is Bookkeeping Important for a Small Business?

It’s well-known that bookkeeping is essential if your business gets audited. But keeping up with your books can also help with analyzing and planning for the months and years ahead, streamlining and minimizing accounting costs, and saving countless hours during tax season. You’ll be able to get a snapshot of how your business is performing overall but also get to deep dive into specific analytics of sales, costs, and much more.

 

What Are the Most Common Business Records?

Some business records will be needed often and should be kept on hand for easy access. Whether it’s journals, ledgers, or digital recordkeeping, you’ll want to find an organization method that works best for your business. Generally, it’s best to track transactions daily for easier long-term recordkeeping. 

  • Employee names, addresses, and contact information
  • Employee timesheets
  • Employee pay stubs
  • All tax forms submitted to the IRS
  • Bank statements
  • Insurance documents
  • Contracts, including loans and mortgages
  • Purchase receipts
  • Customer invoices
  • Tax returns
  • Financial statements
  • Depreciation schedules
  • Business registration documents
  • Employer Identification Number
  • Board of Directors meeting minutes
  • Legal files
  • Emails

Whether it’s journals, ledgers, or digital recordkeeping, you’ll want to find an organization method that works best for your business.

 

How Long Should I Keep Records?

The length of time for keeping records varies but the general rule of thumb is to keep records for a minimum of seven years for IRS reporting. Of course, your insurance or creditors may require you to keep records for longer. You can see a full breakdown of the recordkeeping timelines in this IRS article. 

 

How Do I Pull Payroll?

Depending on how you’re keeping bookkeeping records, the method may look a bit different. But generally, you’ll want to go to your reports menu, find the payroll section, and go to payroll summary. While there, you’ll want to narrow your date range and employee search. Lastly, you’ll want to run the report.

 

How Can I Improve My Tax Position to Reduce My Payout?

The quickest and most reliable way to improve your tax position is to work with top-quality compliance and specialized accountancy services, like 3Sixty Advisors. 

 

Contact us to learn how we help small businesses like yours with Employee Retention Credits, Research & Development tax credits, and Work Opportunity tax credits.

See firsthand how the Providertech portal works. View a live demo during the webinar, get your questions answered, and test it out for yourself. Get your unique code to demo the portal following the webinar.

 

What are the Penalties for Not Complying — Willfully or Otherwise — with the Corporate Transparency Act?

When you hear or read about an individual spending two years in the slammer, you probably assume that person has committed at least a somewhat serious crime. Maybe Joe Schmo was hit with a Class D felony for speeding to elude police or possession of an assault weapon.

Would you believe, though, that starting in 2024, some business owners will be penalized with a hefty fine and up to two years in prison? For what? Not money laundering or tax evasion but willfully not complying with the soon-to-be-enacted Corporate Transparency Act (CTA).

If this is the first you’re reading about the CTA, you’re not alone — even though an estimated 32.6 million current businesses will be affected by it in 2024, many only recently became aware of it. Scheduled to take effect on January 1, 2024, the CTA was enacted as part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for FY 2021.

What is the purpose of the CTA? According to FinCEN, it is designed to protect U.S. national security and strengthen the integrity and transparency of the U.S. financial system. The agency believes the rule will help stop criminal actors, including oligarchs, kleptocrats, drug traffickers, human traffickers and those who would use anonymous shell companies, to hide their illicit proceeds.

The Act’s Beneficial Ownership Information (BOI) Reporting Rule mandates that applicable businesses submit identifying details into a federal database maintained by the United States Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The database, the Beneficial Ownership Secure System (BOSS), will only be accessible to law enforcement officials in the U.S. and internationally.

There is no fee for applicable businesses to submit their BOI to FinCEN and no annual reporting requirement. However, the CTA requires businesses to correct and update their report when necessary.

Red push pin on calendar, Red circle on 31.

What is the Deadline for Reporting Beneficial Ownership Information to FinCEN?

Domestic and foreign reporting companies registered with a secretary of state’s office before January 1, 2024 must submit their initial BOI report to FinCEN by December 31, 2024. Reporting companies registered on or after January 1, 2024 must file a BOI report within 90 calendar days of either receiving actual notice that its formation has become effective or the secretary of state or similar office first providing public notice that it has been formed — whichever occurs first. FinCEN issued a final rule on November 30, 2023 that extended that filing day from its initial 30-day deadline.

Everyone makes mistakes, and business owners who voluntarily submit a report correcting any inaccurate data filed with FinCEN within 90 days of the deadline for their initial report have — according to Section 5336(h)(3)(C) of the Corporate Transparency Act — a safe harbor from TCA penalties. Individuals who do not comply with CTA requirements or willfully report inaccurate information are subject to civil and criminal penalties, including fines and possible jail time.

What is the Penalty for Willfully Violating the Corporate Transparency Act?

There are multiple answers to this question — CTA non-compliance may result in penalties, both civil and criminal. Here is a summary of those penalties straight from FinCEN:

“The willful failure to report complete or updated beneficial ownership information to FinCEN or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues or criminal penalties, including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.”

Fake Dictionary, Dictionary definition of the word penalty.

The three types of BOI reporting violations subject to penalty consist of willful failure to file a report, providing false information and unauthorized disclosure of information. Corresponding penalties include:

Willful Failure to File a Report

Failure by a reporting company to file a required initial report could result in fines of up to $500 per day capped at $10,000 and up to two years in jail. However, subsequent events that would necessitate an amendment to such required but missing filing — had the initial report been submitted — also accrue.

That means that failure to file an initial report may result in aggregate fines accruing well in excess of $10,000 (prior to an initial notification of violation coming from FinCEN to the reporting company). Also, when you do not report BOI to FinCEN or omit necessary information, it’s more likely that federal authorities will investigate your company and its business practices.

Providing False or Inaccurate Beneficial Ownership Information

Reporting companies knowingly providing inaccurate or false BOI could be subject to the same penalty of $500 per day (up to $10,000) and up to two years in prison. That’s also the case for reporting companies willfully failing to update or correct such false or inaccurate information.

Unauthorized Disclosure of BOI

This type of CTA violation can come with a steeper monetary penalty. An individual or reporting company that accesses information from BOSS without proper authorization and without disclosing it may be penalized with not only the $500 per day fine — up to $25,000 — but also five years in prison. If that entity is violating another U.S. law or has a pattern of illegal activity involving more than $100,000 in a 12-month period, the beneficial owner could receive a fine of up to 500,000 and 10 years in prison.

Conclusion

Getting jail time for failing to report information to the U.S. government might seem like a steep penalty, but the punishment for CTA violations is part of enforcing the new law. If you’re unsure of how the CTA and BOI might affect your business, the multidisciplinary team here at 3Sixty Advisors can work with you to ensure your filing is timely and accurate. Contact us today to schedule a meeting!