Congress and Corporate Transparency: A New Burden for LLC Owners

By Garrett Sutton, Corporate Direct Solutions

T he Federal government wants to know who owns your busi- ness and your real estate holding LLCs. In December, 2020 Congress passed the Corporate Transparency Act (CTA). Before this bill compa - nies did not have an obligation to report their true owners. As long as the company paid their taxes there wasn’t an issue. But within the federal bureau - cracy and law enforcement circles there are people who just need to know more. Arguing that sharehold- er anonymity allowed bad people to engage in financial crimes, includ - ing - sound the alarms! - money laundering and terrorist financing, the CTA passed both houses. Instead of requiring the states, which govern corporate formation, to collect such information, beneficial ownership data on every corporation and LLC must now be reported every year to the U.S. Department of Treasury’s Financial Crimes Enforcement Net - work (FinCEN). Opponents argued that such infor - mation could be easily gained and misused. Proponents countered with hubris, stating that all the sensi- tive data would be stored on private

networks away from public scrutiny. Their assurances of confidentiality occurred the same week as the iden - tification of the massive Solar Winds hack, the Pearl Harbor of cyber-at - tacks, in which the Russians gained God access to thousands of federal websites and networks. But never mind that. Law enforce - ment’s desire to know who owns every corporation, LLC, LP and other state-chartered entity is clearly writ - ten into the legislation. FinCEN must keep the names and addresses confi - dential (servers willing) except when: 1  Federal Agencies involved law enforcement, intelligence and national security want it; 2  State and local agencies involved in criminal or civil investigations after obtaining a court order want it; 3  Foreign intelligence agencies want it; and 4 Other federal regulatory agen- cies including the IRS want it. As such this confidential infor -

mation can be expected to be used by both governments and dark web hackers. By 2023, every business entity at the time of its formation and on an annual basis thereafter must report its beneficial owners’: 1  Full legal name; 2  Date of birth; 3 Current residential or business street address; and

4 Unique identifying number from a U.S. passport, state

driver’s license or similar state issued ID.

The complete disclosure require - ments, including the meaning of ‘beneficial owner’, will be further fleshed out by future regulations. Corporate Direct will keep you informed of these new rules and will attempt to assist you with filing your FinCEN report. Failing to proper - ly file will carry penalties of up to $10,000.00 and two years in prison. So while not welcoming this new reporting burden, we will work with you to stay on the safe side of it. •


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