Happy Holidays from Balcerzak Financial Services!

'TIS THE SEASON

With the holidays upon us and 2023 coming to an end, all of us at Balcerzak Financial Services wish you and your loved ones a very happy holiday and a safe, joyous and prosperous New Year!

We will be sending out updates in January about the upcoming tax season but see below for a few important items we want to make you aware of (these primarily impact business owners with the exception of TABOR and IRS penalty relief)

3D illustration of a rubber stamp with the word refund stamped over white background.

TABOR

In our last newsletter (reminder, you can see all past newsletters on our website), we had indicated that since Proposition HH failed to get approved in the November election, there was more to come on TABOR and property taxes due to a special legislative session Governor Polis ordered.

Highlighted below are several changes that were approved in the special session

TABOR will be a flat amount as opposed to the graduated scale where the more you made, the more you received;
The TABOR refund will be $800 if single (up from $750) and $1,600 if married (up from $1,500)
The TABOR refund will be built into the 2023 CO tax return you file. It will either add to the refund you are receiving or reduce the tax you owe CO.
All residents will get a $55,000 reduction in their appraised property values used for property taxes.
The property tax assessment rate will be reduced from 6.765% to 6.7%

FAMLI Update

As we have been discussing throughout 2023, January 1st is when employees can claim benefits they are entitled to under the FAMLI program that voters previously approved.

While 2023 was a year where premium contributions were made (by all employees and from employers with more than 9 employees), 2024 is the first time benefits can be claimed.

As a reminder, the claim is made to the State of Colorado (the DOL) similiar to unemployment. If approved, the employee can take up to 12 weeks paid leave (and in some cases more) with the payment coming from the FAMLI fund (not you). You must assure the employee's job is available for them when they return from leave.

The employee will not get 100% of their normal pay. Generally speaking it is up to 90% of their normal pay but is based upon a sliding scale and is capped at $1,100/week. The benefit calculator link below let's you do some math on estimated benefits. In addition, the second link has the useful fact sheet from the DOL on FAMLI if you need a refresher.

Benefits Calculator

FAMLI Fact Sheet

USA unemployment rate. Unemployment in America due to financial crisis. Magnifying glass over unemployment. Growth of applications for benefits. Company ruin led to layoffs. Dollars. Job loss in USA

Annual Unemployment Rate Notice

The DOL has begun sending out the annual rate notices to businesses for unemployment. These often cause confusion so a few comments

Your UI rate is "fixed" for each calendar year.
However, each year your rate can go up or down based upon your unemployment claim experience.
If you do not fire, layoff or terminate employees, your UI rate will generally be lower over time.
Conversely, if you do tend to fire, layoff or terminate employees (and therefore put more demands on the UI system), your UI rate will generally go up over time.
Keep in mind that employees who quit or are fired with cause should not have received unemployment and, therefore, should not negatively impact your rate.
The DOL looks at your historical premium contributions and UI claims made to determine if your rate from the coming year goes up, down or stays the same.
The link below has a sample rate notice and the key box is Item 9. This is the rate you will need to contribute in 2024. Make sure your payroll provider or CPA gets a copy of this notice so that your premiums in 2024 are calculated and paid correctly.

Sample UI Notice

On the table are reports_ a magnifying glass_ a calculator_ a pen_ and a white notebook with the text TAX PENALTY. Business concept

IRS Penalty Relief

The IRS recenlty announced that they will waive failure to pay penalties for eligible taxpayers for tax years 2020 and 2021.

This relief is partly due to the fact the IRS suspended automated payment reminders during COVID.

No action is needed - if you are eligible and have these penalties outstanding, the IRS will automatically waive them. If you already paid these penalties in the past and are eligible for relief, you will automatically receive a refund.

Conceptual business illustration with the words beneficial ownership

BOI - what is it?

BACKGROUND

BOI is Beneficial Ownership Interest. BOI reporintg is a new requirement for businesses as mandated by the Corporate Transparency Act (CTA)

14 states do not require reporting of business entity owners when the entity is formed. New companies were flocking to these states to register businesses. Congress believes some of these entities were avoiding disclosure requirements because they were engaging in money laundering, financing of terrorism, tax fraud or drug/human trafficking.

As a result, even though CO was NOT one of the 14 states, most businesses in the US must now file a BOI report with the IRS. This report will disclose data on beneficial owners. A beneficial owner is someone that either has over 25% ownership in the entity or has significant control of the entity (a CEO, President or CFO for example even if they own less than 25%).

KEY POINTS

This is NOT an annual filing requirement - you file once and then only re-file if you have changes in BOI.
Existing businesses have until Jan 1, 2025 to file unless they have a change in BOI during the year. If so, they have 30 days from the BOI change to file.
New businesses formed in 2024 will have 90 days from date of formation to file.
The BOI can only be filed electronically but as of this newsletter the filing process and form are still under review.
BOI reporting will likely include things such as name, address as well as images of identification documents (passport, driver's license, etc.).
The penalties for not filing BOI on time are large ($500/day up to $10,000 and possible jail time).
Although certain entities are exempt from BOI reporting (such as corporations with publicly traded stock) we believe most of our business clients will be required to comply with BOI reporting.

More to follow on this topic as there are several moving parts. In fact, the House passed a bill on Dec 12th to delay BOI implementation for 1 year and the bill is now under review with the Senate.

BALCERZAK FINANCIAL SERVICES