Posted on 12/18/2023 3:45:19 PM PST by Twotone
Have you heard of the Corporate Transparency Act? Most of the estimated 32 million small business owners, including sole proprietors, whom the new law affects have not. It was just recently put on my radar by a handful of people — quite a shock for a measure that takes effect at the start of the new year!
A new reporting rule under the law means that businesses will need to file information with the Financial Crimes Enforcement Network (a bureau within the U.S. Department of Treasury), including personal information about the people who are associated with the business, or risk penalties for noncompliance. This is being done in the name of "fighting money laundering." Sure.
The law is another administrative hassle that adds to small business owners’ paperwork requirements and takes entrepreneurs away from more productive economic activities.
If you are not familiar with FinCEN, its mission is “to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.”
Of course, the law includes around 20 exemptions, such as publicly traded companies, U.S. operating companies with 20 or more full-time employees and $5 million in sales, and some others, which means that the burden of this rule falls primarily on small businesses, including solopreneurs (aka one-person entities).
While it is not uncommon for unsavory folks to use certain business structures to create shell corporations to launder money, actual instances of this are few and far between. This rule will impact tens of millions of law-abiding small businesses.
FinCEN estimates it will take three hours for initial compliance (but who knows, depending on if you have to track down the information they are asking for or if you have questions). Then you will be responsible for letting FinCEN know of any future updates and changes.
First, this is an unnecessary invasion of privacy for small businesses, creating a database filled with personal information. And it is hard to believe the law will do anything meaningful to stop money laundering or that the burden it generates will justify any possible small benefit to come from it. Not to mention the security risk of having yet another database full of information for cybercriminals and foreign adversaries to target.
Moreover, it is another administrative hassle that adds to small business owners’ paperwork requirements and takes entrepreneurs away from more productive economic activities.
Of course, there is also a fee of $85 to milk from the small businesses already burdened by this compliance — that is, if you understand what you are doing and don’t need to hire some type of adviser to assist you, which will cost you much more.
And, again, very few people even know about the law.
By the way, you can’t blame Joe Biden for this one. “The act falls under the scope of the Anti-Money Laundering Act of 2020 and was enacted as part of an expansive national defense authorization package on Jan. 1, 2021,” the Mississippi Business Journal reported. “The package passed through Congress with broad bipartisan support before being vetoed by then-President Donald J. Trump. Both houses of Congress voted to override the veto.”
As it appears you have a year for initial compliance if you are an existing small business (but only 30 days after creation if you are starting a new one), I am likely to wait until the back half of 2024 to see if the rule gets revised or postponed before I waste any of my valuable time on it.
But in the meantime, if you are a small business owner or service small businesses, put it on your radar and ask your legal and accounting advisers about it.
The government proves once again that it doesn’t care about small businesses but only about what gives government officials more power. Unfortunately, entrepreneurs have to pay the price.
They'll cross-reference the non-compliant with a database of Trump donors so they know where to start first.
Have a step-bro who did biz there for years. He said to always expect CCP spies in the board room and spying on phone calls.
“The Deep State like big business only.”
Of course, they are fascists, only a few we’ll controlled big businesses in each area are allowed.
Bingo!
This is how National Socialism worked. “You can own your business, but we’ll tell you how to run it.” Cue the Gauleiters.
Here is the issue. They not only want direct ownership, they want anyone who has control over the business. Does the wife gave indirect control? How about the office manager? The uncle who financed the business? The landlord who gets income based on receipts?
Get it wrong and the penalties start at $500 per day and possible jail time.
Interesting that this may give new IRS agents something to do too?
And the reason is to keep Putin away. Like a 10k fine is a deterrent.
pick a few
get the LEFTIST media to report it far and wide
scare the others into compliance
I smell obama.
So this is supporting one of the “isms” - fascism, communism, and European socialism. Watch you social credit rating. Booo.
I started a family limited partnership for some timberland I owned. 6 weeks after I filed the final paperwork, I got a letter from the (D) IRS stating that I owed $6,500. No explanation included. My friend who does my taxes sent a letter back to them pinning their ears back. I had not brought in a cent to that point.
I am on their radar and expect to be harassed in the future.
Big government overreach.
“the burden of this rule falls primarily on small businesses, including solopreneurs (aka one-person entities)”
Not giving legal advice, but I think this does not apply to “solopreneurs” who do business under an assumed name (aka DBA). The normal reason for incorporating or forming an LLC is to protect personal assets from liability if the business is sued (or fined, etc.). Many companies are not set up correctly, leaving their owners susceptible to lawsuits, etc. which is known as “piercing the veil.”
It’s obvious big government needs to be downsized by 3/4 at least. I used to think 1/2 would be enough but I can now see that’s not enough.
the USA already has very complex regulatory rules around banking and financial transfers. Large banks literally have thousands of people in “compliance” already. International banking is already highly regulated
Its more dead weight and bloat on the economy, which will contribute to our growing 3rd world status
obama, when he first assumed office, kept referring to “The Chicago Way.” He then began showing us The Chicago Way by making life difficult for small businessmen, the majority of whom voted republican.
Throughout his reign, the number of small businesses declined. Those that were able to survive got smaller. His idea was to ruin all who opposed him.
This is the point of the legislation that is the subject of the post.
And most often via extortion of one flavor or another.
*SPIT*
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