Government loves the big gun approach to regulations. For even the smallest of issues, they use a bazooka. The purpose is simple—to take over a product or industry. Bruce Bialosky points this out as another way Biden and his crowd are making our economy Socialist.
“The Corporate Transparency Act passed in 2021 with bipartisan support. It put enforcement of this in the hands of a U.S. Treasury bureau named the Financial Crimes Enforcement Network (FINCEN). According to Director Andrea Gacki, their website states “This final rule is a significant step forward in our efforts to protect our financial system and curb illicit activities.” “BOI (Beneficial Ownership Information) can provide essential information to law enforcement, intelligence, and national security professionals as they work to protect the United States from bad actors who exploit anonymous shell companies to engage in money laundering, corruption, sanctions and tax evasion, drug trafficking, fraud, and a host of other criminal offenses with impunity, while legitimate businesses suffer from their misdeeds.”
That all sounds wonderful until you find out that an estimated 32.6 million companies will have to file reports on the website by the end of 2024. That includes all corporations, LLCs, partnerships, S corporations and some trusts. This is not aimed at big businesses; it is aimed at small businesses. Your company is exempt from reporting if you have more than 20 full-time employees or you run a tax-exempt entity. One financial professional suggested a lot of shenanigans are done through non-profit entities wondering why they are exempt.
In addition, if you have more than $5,000,000 in gross receipts you do not have to file. There are 23 other categories of businesses that may be exempt. These businesses are licensed businesses like banks, insurance companies, investment brokerage companies, etc.”
This is how the Democrats will close out small businesses—by crushing them with expensive paperwork—wit no meaning.
Killing a Mosquito with a Bazooka
Posted by Bruce Bialosky, Flashreport, 3/6/24 https://www.flashreport.org/blog/2024/03/06/killing-a-mosquito-with-a-bazooka/
You have probably seen a cop show where there is a company owned by an entity that is owned by another entity to hide the real owners. A perfect example of someone using what can be referred to as “shell companies” is Hunter Biden having more than 20 of them. Congress wants to stop these activities which are believed to be sheltering illegal activities. Their solution? A proposal with such overkill it is akin to killing a mosquito with a bazooka.
The Corporate Transparency Act passed in 2021 with bipartisan support. It put enforcement of this in the hands of a U.S. Treasury bureau named the Financial Crimes Enforcement Network (FINCEN). According to Director Andrea Gacki, their website states “This final rule is a significant step forward in our efforts to protect our financial system and curb illicit activities.” “BOI (Beneficial Ownership Information) can provide essential information to law enforcement, intelligence, and national security professionals as they work to protect the United States from bad actors who exploit anonymous shell companies to engage in money laundering, corruption, sanctions and tax evasion, drug trafficking, fraud, and a host of other criminal offenses with impunity, while legitimate businesses suffer from their misdeeds.”
That all sounds wonderful until you find out that an estimated 32.6 million companies will have to file reports on the website by the end of 2024. That includes all corporations, LLCs, partnerships, S corporations and some trusts. This is not aimed at big businesses; it is aimed at small businesses. Your company is exempt from reporting if you have more than 20 full-time employees or you run a tax-exempt entity. One financial professional suggested a lot of shenanigans are done through non-profit entities wondering why they are exempt.
In addition, if you have more than $5,000,000 in gross receipts you do not have to file. There are 23 other categories of businesses that may be exempt. These businesses are licensed businesses like banks, insurance companies, investment brokerage companies, etc.
Once you determine you must file this report, what do you have to report? You must tell them every person who has 25% or more ownership. In simple terms, if you are the boss or one of the bosses you must be included in the report. When the company files they must report your full legal name, home address and social security number. Most importantly, you have to provide a PDF of each person’s driver’s license or passport.
If anything changes after filing, you must also report the change within 30 days. That is an ill-defined requirement. For example, if you renew your driver’s license and the issue date and expiration date change, do you have to file a change?
As with any government mandate today there are penalties – lots of penalties – for non-compliance. You are subject to civil penalties of $500 per day if you don’t comply. Or you could be subject to criminal penalties of up to $10,000 and imprisonment for up to two years.
You can try to file this yourself, but most likely you need a professional. The American Bar Association has said it is questionable attorneys should do it. The insurance companies for CPAs say they are not insuring for this act because they believe it to be legal work, not CPA work. A high-powered attorney who has been giving seminars on compliance with this new law stated he believes attorneys will include this in their process while creating a new entity for someone. He also stated that he believes CPAs are best suited to file for existing companies because they have the current information on the owners of companies, including who is in charge. Then there are those who utilized a website to form their own company and don’t have an attorney or a CPA. Remember these are small businesses.
I spoke to attorneys who are going to charge at least $500 to comply with this law for new entities. That fee might increase for existing companies because of the law’s complexity. Remember, these are small companies by the law’s own definition. It is another barrier to people trying to start a business and free themselves from working for the gigantic corporations about which many of the elected officials who voted for this complain.
FINCEN has promised protection of everyone’s personal information. Yeah, right. First, their own website lists a multitude of agencies that will gain access to this information. Second, this comes on the heels of IRS contractor Charles Edward Littlejohn stealing up to 7,500 individuals’ tax information and distributing it to the New York Times and ProPublica. He was charged with just one felony and received only five years in prison. Not much of a deterrent for the disclosure of 7,500 tax returns. How trusting should we be?
A federal judge has in just the last couple of days put a hold on the program saying it is duplicative overkill as the states register all these businesses. It is yet unclear whether the Biden Administration will appeal.
The U.S. House of Representatives passed a bill to delay implementation of this law for existing businesses until 2025. The Senate has not yet addressed it. What they both should do is put a spike in the core of this overly invasive and costly mandate. It is just like the government to kill a mosquito with a bazooka.
