When legislators issue a flurry of tax reforms, companies may seek guidance on how to gain an advantageous position. This article will explore some recent tax issues that legal firms should be aware of when assisting clients. Estate planning, choice of entity structure, the Loper Bright decision, and the Corporate Transparency Act (CTA) are among items worth considering.
Estate Planning
Current estate and gift tax provisions allow for exemptions of just under $14 million per individual. The exemption allows taxpayers to avoid tax on transfers of assets up to a certain amount. However, with a Tax Cuts and Jobs Act of 2017 (TCJA) provision scheduled to sunset after this year, exemptions could drop to an estimated $6 million to $7 million per person.
Taxpayers should consider having an estate plan in effect—or revising an existing one—before a potential decline to take advantage of the current exemption. If the exemption does drop, it may be too late to take any action afterward. For more details, see our FORsights™ article, “Estate & Gift Tax Exemption Sunsets After 2025.”
Corporate Tax Rates
With corporate tax rates currently at 21% (down from 35% before the TCJA) and the 20% deduction on qualified business income (QBI) from a pass-through entity set to expire in 2025, businesses may wish to structure as a C corporation rather than a pass-through entity such as a partnership or an S corporation. Operating as a pass-through entity from a tax perspective may be less beneficial if the QBI deduction sunsets. For example, an owner of a pass-through entity with only pass-through income totaling $191,950 could pay an estimated $15,500 more in taxes without the deduction.
Legal firms should be mindful of what restructured organizations need to take advantage of lower tax rates. Note that factors determining the appropriate business structure can be complex, and tax rates should not be the sole consideration.
Loper Bright Decision
Last year, the U.S. Supreme Court decided in Loper Bright Enterprises v. Raimondo to end the longtime “Chevron doctrine,” which required courts to defer to regulating agencies to interpret gaps and ambiguities in legislation. Courts are to now decide whether the agencies acted within statutory authority and not just rely on the agency’s interpretation. The ruling could prompt potential legal challenges to IRS regulations.
Corporate Transparency Act
Legal firms should keep up with the CTA, which has faced challenges in court. The CTA was designed to require reporting companies to report certain beneficial ownership information (BOI) to identify individuals who directly own or control specific entities to the Financial Crimes Enforcement Network (FinCEN). FinCEN is authorized to collect the information and disclose it to authorized governmental authorities and financial institutions.
The FinCEN announced on February 27, 2025 that it will not enforce penalties and fines related to BOI reporting requirements within existing deadlines. In addition, the U.S. Department of the Treasury announced on March 2, 2025 that it will not enforce BOI reporting requirements against U.S. citizens or domestic reporting companies or their beneficial owners. Treasury intends to narrow the scope of the rule to foreign reporting companies.
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How Forvis Mazars Can Help
In addition to these topics, legal firms may encounter other tax-related items of interest. Forvis Mazars can assist. We work with a wide variety of professional services firms to help handle risk while keeping an eye on their growth goals and the satisfaction of their clients and staff.
If you have any questions or need assistance, please reach out to our professional services team at Forvis Mazars.