Hey Newsies,
A big thanks to @TheRealChipA for bringing up this article and super important bit of news for US business owners!
We have a bit of a confusing one today, but it’s important to bring up and talk about! We’re looking at regulations, with an article from the Wall Street Journal (WSJ) reporting on a new requirement from earlier this year, for many US businesses to file a form with another government agency to give more information about your business. However, since then, an article from Forbes explains that this law is being contested, having been declared unconstitutional by a federal court. I’d love to hear your experiences on this.
WSJ: A New Business Ownership Disclosure Rule Launched, but Many Don’t Know About It
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Forbes: Tax Breaks: Corporate Transparency Act Ruling Attracts Attention As Tax Season Rolls On
In case you can’t access the WSJ article, there’s also a press release directly from the U.S. Department of Treasury about it.
@TheRealChipA helps to explain:
“As part of a law passed by Congress in 2021 — the Corporate Transparency Act — many US-based businesses must now file a new form identifying what are called Beneficial Owners. Beneficial Owners are people who control/own more than 25% of a business, usually partners but also others who qualify. This is a law similar to one already in force in the UK and the EU and it is used to crack down on shell corporations and other corporate fraud.”
“Most companies that were in existence as of January 1, 2024, are required to file this new form. The link to the Treasury Department’s Website on this is found here. You have all of 2024 to get this done for companies that existed before January 1st. But, you don’t want to wait, either. The fines are stiff for late filing and for non-filing.”
Not every business was deemed required to file, and the qualifications can be a little tricky to understand if you need to file. FinCEN lists out more information in their BOI Small Business Compliance Guide, and you may want to speak to a professional in order to determine if you fit the criteria.
Since a federal court has recently declared it unconstitutional, it all gets more confusing. It may go into appeal at some point and be enforced again in the future. As of now, it’s very unclear whether or not new or existing businesses need to file this currently, or in the future, if it is declared constitutional again. As always, we recommend speaking with a legal or tax professional and keep yourself up to date with the latest updates around this law.
@TheRealChipA shared his experience in filling out these forms:
“I did this in one day for three LLCs that my husband and I own. It took me about 15 minutes for each company to fill out and file the form electronically. I found it to be pretty self-explanatory, as government forms go.
“I’ve already submitted three forms, so if anyone has questions, you can ask here. However, I can’t answer legal or financial questions — only those about my experiences with the form itself. For legal/financial questions, I’d recommend reaching out to your attorney, your CPA or your state’s Secretary of State website.”
What’s your perspective:
- Did you know about this law, either its passage or the fights over it?
- If you already filled it out, how did the filing process go for you?
- What are your thoughts on the battle over the constitutionality of it?
Can’t wait to hear your thoughts!
Pesso
This article is for informational purposes and does not constitute legal advice. For guidance or advice specific to your business, you should consult with a qualified legal professional.
