The year 2023 brought a remarkable volume of tax developments — from the continuing implementation of landmark legislation to aggressive IRS enforcement shifts and the arrival of an entirely new reporting regime. For business owners and their advisors, keeping pace with the changes required constant attention. As we close the books on 2023, this post recaps the most significant tax developments of the year and their implications heading into 2024.

SECURE 2.0 Implementation

The SECURE 2.0 Act, signed into law in December 2022, continued its phased implementation throughout 2023. Key provisions that took effect include the increase in the required beginning date for required minimum distributions to age 73 (up from 72), new Roth options for SEP and SIMPLE IRAs, and the ability for employers to make matching contributions on a Roth basis. The IRS issued proposed regulations in February 2023 addressing the revised RMD rules, including the controversial requirement that designated beneficiaries of inherited IRAs who are subject to the 10-year rule must continue taking annual distributions if the original account owner had already begun RMDs.^[1]

For business owners with employer-sponsored retirement plans, SECURE 2.0's automatic enrollment requirement — which applies to new 401(k) and 403(b) plans established after December 29, 2022 — created new compliance obligations. The enhanced starter plan provisions and increased catch-up contribution limits (effective in later years) provide additional planning opportunities.

ERC Moratorium and Enforcement

The Employee Retention Credit remained one of the most contentious tax issues of 2023. In September, the IRS imposed an immediate moratorium on processing new ERC claims, citing a flood of dubious claims promoted by aggressive marketing firms. The moratorium, which remained in effect at year-end, halted processing of all new claims while the IRS developed additional compliance measures.^[2]

The IRS also opened a voluntary disclosure program for employers who received ERC payments they believe they were not entitled to, offering the opportunity to repay 80% of the credit received while retaining 20% to account for fees paid to promoters. The program signals the IRS's intent to pursue aggressive enforcement against improper claims, and businesses that received ERC payments should carefully re-evaluate their eligibility before the inevitable audit wave begins.

IRA Energy Credits and Prevailing Wage Requirements

The Inflation Reduction Act's clean energy tax credits continued to generate significant guidance in 2023. The IRS finalized regulations on the prevailing wage and apprenticeship requirements that taxpayers must meet to claim the full value of many energy credits, including the production tax credit under Section 45 and the investment tax credit under Section 48. The final regulations clarified the correction and penalty framework and provided detailed guidance on what constitutes compliance with the Davis-Bacon prevailing wage standards.^[3]

The direct pay (elective payment) and transferability provisions also became available in 2023, allowing tax-exempt entities to receive refundable credits and allowing taxable entities to sell certain credits to unrelated buyers. These provisions are transforming the energy credit marketplace and creating new planning opportunities for businesses across sectors.

Bonus Depreciation Phase-Down

As discussed in our earlier post on the topic, 2023 marked the first year of the TCJA bonus depreciation phase-down, with the first-year rate dropping from 100% to 80%. The decline will continue — 60% in 2024, 40% in 2025, 20% in 2026, and zero in 2027. The Tax Relief for American Families and Workers Act, which would retroactively restore 100% bonus depreciation, passed the House in January 2024 but faces an uncertain path in the Senate.

Corporate Transparency Act

The Corporate Transparency Act's beneficial ownership information reporting requirement took effect on January 1, 2024, following a year of preparation and rulemaking by FinCEN. Existing companies have until January 1, 2025, to file their initial reports, while new companies formed in 2024 must file within 90 days. The penalties for noncompliance — up to $500 per day and potential criminal liability — underscore the importance of compliance.

Conservation Easement Crackdown

The IRS continued its aggressive enforcement campaign against syndicated conservation easement transactions in 2023. The Tax Court issued several notable opinions rejecting inflated easement valuations, and the IRS maintained its designation of syndicated conservation easements as listed transactions requiring disclosure on Form 8886. Settlement offers were extended to some taxpayers, and legislative proposals to impose stricter valuation standards continued to circulate.^[4]

Estate Tax Planning Window

The federal estate and gift tax exemption reached $12.92 million per person in 2023 ($25.84 million for married couples). This historically high exemption — more than double the pre-TCJA amount — is scheduled to sunset after December 31, 2025, reverting to approximately $7 million (adjusted for inflation). The IRS has confirmed that gifts made using the elevated exemption will not be clawed back after the sunset, making 2023 and the next two years a critical window for estate tax planning.^[5]

Looking Ahead to 2024

The tax landscape heading into 2024 is shaped by the continuing implementation of recent legislation, an increasingly active IRS (bolstered by Inflation Reduction Act funding), and the approaching sunset of the TCJA's individual and estate tax provisions. Business owners who stay ahead of these developments — rather than reacting to them — will be best positioned to minimize their tax burden and avoid compliance pitfalls in the year ahead.