US LLCs must file new report with Treasury FinCEN or risk prison(fincen.gov)
fincen.gov
US LLCs must file new report with Treasury FinCEN or risk prison
https://fincen.gov/
4 comments
Ken Paxton brings lawsuits against everything, though. Does this one have any merit?
Do you think a judge would grant a preliminary injunction without merit?
To win a preliminary injunction you must show:
1. Likelihood of success on the merits
2. Irreparable harm without it
3. Balance of harms favors you
4. Injunction is in the public interest.
To win a preliminary injunction you must show:
1. Likelihood of success on the merits
2. Irreparable harm without it
3. Balance of harms favors you
4. Injunction is in the public interest.
Is that a trick question? They do all the time in Texas.
Or find a judge who will disregard that and rule on ideological grounds regardless of the facts and law...
This lawsuit was filed by a bunch of small entities, most importantly the Libertarian Part of Mississippi, but not including Ken Paxton, and a judge already granted the injunction, so at least he thinks it has merit. By the letter of the law, it's pretty clearly unconstitutional, but under the last hundred years of precedence of allowing almost anything under the commerce clause, it's less clear. The biggest issue with the CTA is definitely that it affects some non-profits. Arguing that requiring local non-profits to report their managers to the feds is "regulating interstate commerce" is a stretch for even the most liberal courts.
"In 2021, the 21-page Corporate Transparency Act was tucked into a sweeping 1,482-page defense bill passed by Congress over President Donald Trump’s veto."
How?
How?
I'm not big on reporting, but arguing that the report is burdensome for small businesses is laughable. The BFOI takes 5-10 min to complete.
For you and I and everyone else on HN, the report is indeed trivial.
For many other small businesses, it is not.
There are millions of businesses which still operate largely on paper invoices and registers. Owners can't understand the text of the BOI website or the technical requirements, which includes registering for Login.gov.
Others are completely engrossed in their day to day operations and won't even hear about the dire warnings from an obscure federal agency. If they happen to check the Yahoo or Hotmail accounts they use for their business (often their personal communications too) they are just as likely to ignore it as spam.
That leaves it up to local accountants to fill the gap. Many don't know, or aren't keeping track of this because it's not a tax thing. When I asked my accountant about it she didn't answer for more than a month, and then sent out an explanation to all of her clients along with the following message:
If you want to engage us to prepare the BOI, our hourly rate is $250 will apply, with a one hour minimum. To minimize your fee, it is imperative for you to provide us with all the information required at once. Please contact our office if you wish us to prepare the BOI and we will send an engagement letter that will need to be signed and a list of documents we will need to prepare the BOI.
Ignoring the $500 per day fines and threat of prison time, can you see how dealing with this is a non-starter for a lot of small businesses?
For many other small businesses, it is not.
There are millions of businesses which still operate largely on paper invoices and registers. Owners can't understand the text of the BOI website or the technical requirements, which includes registering for Login.gov.
Others are completely engrossed in their day to day operations and won't even hear about the dire warnings from an obscure federal agency. If they happen to check the Yahoo or Hotmail accounts they use for their business (often their personal communications too) they are just as likely to ignore it as spam.
That leaves it up to local accountants to fill the gap. Many don't know, or aren't keeping track of this because it's not a tax thing. When I asked my accountant about it she didn't answer for more than a month, and then sent out an explanation to all of her clients along with the following message:
If you want to engage us to prepare the BOI, our hourly rate is $250 will apply, with a one hour minimum. To minimize your fee, it is imperative for you to provide us with all the information required at once. Please contact our office if you wish us to prepare the BOI and we will send an engagement letter that will need to be signed and a list of documents we will need to prepare the BOI.
Ignoring the $500 per day fines and threat of prison time, can you see how dealing with this is a non-starter for a lot of small businesses?
I just filled out the form. It’s very straightforward and doesn’t require registering for login.com.
The bigger issue is knowing that it’s needed. I wouldn’t have known about it without seeing this post on HN.
The bigger issue is knowing that it’s needed. I wouldn’t have known about it without seeing this post on HN.
Yeah, this is the first I've heard of ownership information needing to be filed--but I don't have any LLCs to file for, anyway.
Reading what the AG said about it he seems to feel it's a major intrusion for the government to require identifying the owners. I think that's what this is about--exposing the shell corporations. And of course the people who are keeping dirty books won't like that.
Reading what the AG said about it he seems to feel it's a major intrusion for the government to require identifying the owners. I think that's what this is about--exposing the shell corporations. And of course the people who are keeping dirty books won't like that.
Many jurisdictions like the UAE and Singapore also demand Beneficiary Ownership reports, but obviously that does nothing to prevent the countries from being used for shell corporations. Not to mention, you can get away with it by simply reporting your source of funds as a gift from a rando, complete with a fake letter that no one will bother going in detail to verify.
I did too. I was required to register for login.gov.
you don't have to unless you want a FincenID; otherwise you can just upload your DL picture; I did it without any login
> There are millions of businesses which still operate largely on paper invoices and registers
I don't remember, but there's only like at most 10 screens and each is relatively short.
Tell it to my 70 year old stone mason who doesn't have a computer, uses his phone only for making calls, only issues paper invoices and estimates, and only takes paper checks.
Or the local restaurant owner from Guatemala in the nearest town who only takes cash, and has no mechanism for orders other than pointing at the menu or picking up the phone.
A fact that seems to be lost on many tech people in coastal cities is technology literacy is limited. A 2016 OECD skills survey laid out the problem with very deep data across developed countries:
https://www.oecd-ilibrary.org/education/skills-matter_978926...
If you want a summary, this stat should stand out: "26% of adults were unable to use a computer"
https://www.nngroup.com/articles/computer-skill-levels/
Or the local restaurant owner from Guatemala in the nearest town who only takes cash, and has no mechanism for orders other than pointing at the menu or picking up the phone.
A fact that seems to be lost on many tech people in coastal cities is technology literacy is limited. A 2016 OECD skills survey laid out the problem with very deep data across developed countries:
https://www.oecd-ilibrary.org/education/skills-matter_978926...
If you want a summary, this stat should stand out: "26% of adults were unable to use a computer"
https://www.nngroup.com/articles/computer-skill-levels/
If you were a good Samaritan and actually concerned, you can literally sit down and finish this with them in a few minutes.
you are 100% right... but "70 year old stone mason who doesn't have a computer" has to file taxes with the IRS. also "Or the local restaurant owner from Guatemala in the nearest town who only takes cash" also needs to file taxes with the IRS. this is as important of a thing as your Apr 15th deadline to file your returns. so this "low tech / no tech" really is a cop-out - if you are a business owner you have responsibilities or you'll get closed up or punished (or both) if you do not comply
The BFOI isn't require for Sole Proprietorships which is probably the case with your stone mason and maybe the restaurant owner too.
If they know enough to register and report as an LLC or Corporation then they likely know enough to fill out this report.
I agree with you on the disparity in tech knowledge among small businesses. And probably they'll never hear about this report.
If they know enough to register and report as an LLC or Corporation then they likely know enough to fill out this report.
I agree with you on the disparity in tech knowledge among small businesses. And probably they'll never hear about this report.
>For many other small businesses, it is not.
They manged to form an LLC but can't fill out an additional simple form? Come on man be for real.
They manged to form an LLC but can't fill out an additional simple form? Come on man be for real.
Do you know what the BFOI requires? I just filled one out this morning.
It's literally just the names and govID numbers of the beneficial owners. All the info you need is a picture of the driver's license for each owner. That's it. Not a single figure. No percentage of ownership or shares etc. Requires absolutely zero accounting.
Also, the website requires no login, lessening the burden. (Actually for a gov website I thought it was pretty well designed, with clear help/explanations, etc.)
Your accountant is souping it up.
It's literally just the names and govID numbers of the beneficial owners. All the info you need is a picture of the driver's license for each owner. That's it. Not a single figure. No percentage of ownership or shares etc. Requires absolutely zero accounting.
Also, the website requires no login, lessening the burden. (Actually for a gov website I thought it was pretty well designed, with clear help/explanations, etc.)
Your accountant is souping it up.
Many accountants are worried about the risk of filing for their clients and won’t do it at all. Determination of ownership is not as straightforward as one might assume in many cases.
My accountant just told me yesterday that AICP is telling their accountants to just have their clients do it themselves cuz of liability reasons in ownership not being as straightforward in many situations, like you said.
Or it may be straightforward (the people in control know they're in control) but not reflected in the books as it's not an accounting issue, and therefore the accountant doesn't really know (and doesn't want to assume wrong).
You are exactly correct. I'm seeing this already as a relative of mine is exactly that, a small local accountant. He's struggling to inform the many small businesses that he supports. Most can barely use a computer, believe it or not. Some don't have smart phones. He's referring them to a service that is charging a couple of hundred bucks to do the filing.
I also run a small business, I had never heard of this. No one reached out to me, I was not notified in any way. For something that can threaten my freedom, it's a real shocker, the only way I heard about this is because this guy told me. Oh yeah, I also got some random text messages that seemed like spam, probably from one of these parasites trying to charge $300 to fill out a form.
You're absolutely right in your analysis.
I also run a small business, I had never heard of this. No one reached out to me, I was not notified in any way. For something that can threaten my freedom, it's a real shocker, the only way I heard about this is because this guy told me. Oh yeah, I also got some random text messages that seemed like spam, probably from one of these parasites trying to charge $300 to fill out a form.
You're absolutely right in your analysis.
Its burdensome for shell games and transparenct
I think you’re wrong. State, federal, local, speciality (food and alc), health, banking forms… as an entrepreneur there are already dozens of ways to screw up and miss something. Adding on extra things makes it easy to miss and adds on yet another burden.
How many forms how many times a year do we need to fill out to be able to be free commercially? Are you free if you can be fined and thrown in jail for not filling out paperwork?
It all adds up and doesn’t add any value.
How many forms how many times a year do we need to fill out to be able to be free commercially? Are you free if you can be fined and thrown in jail for not filling out paperwork?
It all adds up and doesn’t add any value.
Yes it was not hard.
But why are we adding draconian punishments for new business paperwork?
Why are you ok with that part?
Why shouldn’t this just be a fine?
We really should not be ok with this if you wouldn’t personally be ok with a friend going to jail who failed to file. I, for one, am definitely not.
But why are we adding draconian punishments for new business paperwork?
Why are you ok with that part?
Why shouldn’t this just be a fine?
We really should not be ok with this if you wouldn’t personally be ok with a friend going to jail who failed to file. I, for one, am definitely not.
A fine is just a cost of doing business, and the kinds of entities that this targets would happily just pay the fine to continue being anonymous.
This along with AML/KYC are the new war on drugs. Probably worse to be honest: a compliance regime that costs lawful businesses billions of dollars to navigate, always getting larger, always getting more draconian.
It’s crazy we accept this. Where is the proof any of this is working at all?
It’s crazy we accept this. Where is the proof any of this is working at all?
Hey, I think I may have to file this report but have zero idea on how/where to do it.
Could you share a source for that?
My accountant wants $160 to do that for me. If I could do it in 5-10 minutes I would definitely do it myself.
The problem that I have (and many other LLCs I'd guess) it's not that the report is complicated, it's that I (we) don't even know where to start ...
Could you share a source for that?
My accountant wants $160 to do that for me. If I could do it in 5-10 minutes I would definitely do it myself.
The problem that I have (and many other LLCs I'd guess) it's not that the report is complicated, it's that I (we) don't even know where to start ...
https://fincen.gov/boi you go here and follow the instructions. One of the easiest things to do, I did it myself.
Thanks!
It doesn't make sense to me that a state court should be able to issue a nationwide injunction.
And what's burdensome about it? (Now, a case could definitely be made for it being stupid duplicated effort. Every year I'm annoyed with FinCen over having to file a form about foreign accounts--almost all of the information also appears on our tax return. However, it's a minute or two of cut and paste once a year, no great burden.)
And what's burdensome about it? (Now, a case could definitely be made for it being stupid duplicated effort. Every year I'm annoyed with FinCen over having to file a form about foreign accounts--almost all of the information also appears on our tax return. However, it's a minute or two of cut and paste once a year, no great burden.)
It's not a state court. It was a federal judge in the Eastern Texas district: https://polsinelli.gjassets.com/content/uploads/2024/12/cta-...
This was suspended by a federal judge.
It's likely to end up becoming law eventually. The requirements of this rule are not burdensome and they are directly related to the laws that FinCEN was created to enforce.
Also, we have information exchange treaties with multiple countries that require us to collect some of this information. We haven't been upholding our end of those treaties and this law was intended to bring us toward compliance.
It's likely to end up becoming law eventually. The requirements of this rule are not burdensome and they are directly related to the laws that FinCEN was created to enforce.
Also, we have information exchange treaties with multiple countries that require us to collect some of this information. We haven't been upholding our end of those treaties and this law was intended to bring us toward compliance.
While complying with our treaties as a nation is good and proper, those treaties remain subordinate to the Constitution. To the best of my knowledge, there is no verbiage in there that permits Congress to authorize a law for the mass collection of information, and the centralization thereof that is not directly pursuant to any of its enumerated powers.
This doesn't even touch the government, as a whole's, less than stellar record as it comes to protecting PII from improper disclosure. CTA, as written and implemented, creates a wide array of real and potential harms. It's bad law, as it stands.
This doesn't even touch the government, as a whole's, less than stellar record as it comes to protecting PII from improper disclosure. CTA, as written and implemented, creates a wide array of real and potential harms. It's bad law, as it stands.
There's also no law that requires the IRS to give LLCs flow through tax treatment...
The IRS could conform the treatment of LLCs to the way other limited liability entities are treated... as entities subject to taxation in their own right.
The IRS could conform the treatment of LLCs to the way other limited liability entities are treated... as entities subject to taxation in their own right.
Maybe they could. I am uncertain whether they would need legislation to do so.
IMO that would arguably be the more correct option, but it would also remove the sort of information pool that can enable leakage or fishing expeditions the current law seems aimed to generate.
IMO that would arguably be the more correct option, but it would also remove the sort of information pool that can enable leakage or fishing expeditions the current law seems aimed to generate.
every llc in the county has an address, why tf havent they just sent some mail?
Does anyone have a real link to this? The current link just takes you to a random government site with zero information specific to a rule that you "must file new report" etc.
https://www.texasattorneygeneral.gov/news/releases/nationwid...