Private Clients Group Client Alert

November 22, 2023 Alerts and Newsletters

There have been a few important law and tax changes over the course of 2023 and we in the Private Clients Group here at Verrill wanted to make you aware of the recent changes, such as 1) new strict corporate reporting requirements that impact family held real estate and small businesses, 2) Massachusetts Tax Updates – especially the Massachusetts Estate Tax Exemption being raised to $2 million, and 3) updates to laws relating to retirement plans, including increasing the age in which withdrawals must start.

Below we have summarized some of the important issues that are relevant for our Private Clients and included links to articles that provide more detailed information.

The Corporate Transparency Act

Currently, forming a corporation, limited liability company (“LLC”) or any other entity is a straightforward endeavor that can be accomplished on a largely anonymous basis, without disclosing the ultimate ownership of the company and only requiring limited disclosures about managers, officers, and directors. Due to the passage of the Corporate Transparency Act and related rules, such simplicity will change as of January 1, 2024. These rules impose sweeping new ownership reporting requirements on most entities (whether now existing or to be formed) in the name of combatting money laundering and other financial crimes.

All U.S. entities formed as corporations, LLCs, limited partnerships, and the like are presumed to be “Reporting Companies”, unless exempt or excluded. Most non-U.S. entities that do significant business in one or more states will also be considered Reporting Companies.

In general, companies that are already subject to government reporting requirements, such as banks, SEC registered investment advisors or other companies, most tax-exempt organizations or charitable trusts, and governmental authorities are exempt from the new reporting rules. Furthermore, any entity that (i) has more than 20 full-time employees in the U.S., (ii) regularly conducts business at a physical location in the U.S., (iii) filed a federal income tax return for the previous year, and (iv) reported on such tax return more than $5 million in U.S. gross receipts/sales is also exempt. Lastly, entities that are created without registration of any kind, i.e., domestic trusts and general partnerships, are also exempt.

Unfortunately, the exempted organizations do not include the LLCs for family held investments or real estate that are so often used in an individual or family setting.

Starting January 1, 2024, both previously existing (pre-1/1/24) and newly formed (post 1/1/24) non-exempt Reporting Companies must file what is known as a BOI Report to FinCEN (a bureau of the Treasury department). This report will need to include personal information about each Beneficial Owner of the Reporting Company, i.e., full legal name, date of birth, current address, driver’s license, or passport number and a photocopy of the driver’s license or passport used. Beneficial Owners are the individuals with significant interest in the entity, i.e., directors, owners with more than 25% ownership interest, and anyone else with “substantial influence” over important decisions of the Reporting Company. The inclusion of “individuals” is important because this disclosure must look through pass through entities to get to the underlying owners. There may be many beneficial owners reported as the ownership is traced through various entities, subsidiaries, trusts, holding companies and the like, to the ultimate individual owners.

Entities that already exist as of January 1, 2024 have until January 1, 2025 to file the BOI report. Entities that are created after January 1, 2024 have 30 days to file the BOI reports (FinCEN has proposed extending the time for filing the BOI Report for entities formed after 1/1/24 and before 1/1/25 to 90 days). There are significant penalties for not filing required reports.

There are many more details and important information regarding the Corporate Transparency Act that can be found here, but the bottom line is that any individual or trust that currently holds a business interest should be prepared for reporting requirements beginning January 1, 2025. This CTA reporting applies even if the entity holds non-income producing assets, like family real estate.

2023 Massachusetts Tax Update

On October 4, 2023, Governor Healey signed the “Act to Improve the Commonwealth's Competitiveness, Affordability, and Equity” (the “Act”).


Massachusetts Estate Tax: The Massachusetts estate tax exemption has been increased from $1 million to $2 million for decedents dying on or after January 1, 2023. Importantly, not only was the exemption amount increased, but the Act also eliminates the so called “Estate Tax Cliff”. Under prior law, Massachusetts estate tax was imposed on the full amount of an estate if the estate exceeded the filing threshold of $1 million by even one dollar. Under the Act, only the value above $2 million is subject to estate tax.

Unfortunately, the Massachusetts estate tax is still not “portable” i.e., transferrable to a surviving spouse, as it is federally, so each individual has a $2 million exemption – a couple does not jointly have a $4 million exemption. In other words, you use it (the exemption) or you lose it. Accordingly, an estate plan with revocable trusts is still recommended to gain the maximum benefit from the estate tax exemption.

For estates of individuals who died in 2023 and have already filed a return and paid estate tax, Massachusetts Department of Revenue (MDOR) has advised that it will issue refunds. No action by the taxpayer is required.


Massachusetts Capital Gains Tax: The tax rate for short-term capital gains has been reduced from 12% to 8.5%. Long-term capital gains will still be taxed at a rate of 5%.

Massachusetts Millionaire’s Tax: “The Fair Share Amendment” otherwise known as the Massachusetts Millionaires Tax, took effect on January 1, 2023. It levies an additional 4% surtax on income in excess of $1 million. The $1 million will be adjusted annually for inflation.

Closing a Millionaires’ Tax “Loophole”: As a result of the Massachusetts Millionaire’s Tax, some high earning Massachusetts couples considered filing separate Massachusetts income tax returns in order shelter an additional $1 million of income – taxpayers could previously file jointly federally, but separately for Massachusetts tax returns. However, the Commonwealth has now taken action to quell this strategy and beginning in 2024, a married couple must file a joint Massachusetts return for any year in which they file a joint federal return.

For more information about these and other issues and greater detail, check out our 2023 Massachusetts Tax Update memorandum here.

Other 2023 Law Updates

Earlier this year, Verrill published a 2023 Estate Planning Update. The full memo, which discusses current new law changes and various tax thresholds and exemptions, both federally and for various states, can be found here, but below are highlights:

SECURE ACT 2.0: On December 29, 2022, the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0, which builds upon the original SECURE Act from 2020 and adds some benefits for taxpayers and also clarifies some issues from the prior law such as:

  • Increasing the age at which an account owner must take Required Minimum distributions from their retirement accounts from age 72 to age 73, with the age increasing to 75 in 2033.
  • Beginning in 2024, 529 plan accounts may be rolled into Roth IRAs as long as the account has been open for 15 years with a cap of $35,000.
  • Under the SECURE Act, individuals over the age of 50 may make annual “catch-up contributions” to their retirement accounts, limited to $7,500 for most plans and $1,000 for Roth IRAs. Starting in 2025, for individuals between 60 and 63, the catch-up contribution limit is increased to the greater of (1) $10,000, or (2) 150% of the catch-up contribution limit in effect for 2024. These limits are now indexed for inflation.