Ladies and Gentlemen: Please cut and paste the following letter onto your letterhead and mail to your congress member as soon as possible. This was discussed during the business seminar and the national speaker drafted a template for us to use (I modified as he might be more opinionated then I am 😊)
Dear__________________________:
In 2021, a bipartisan vote of both houses of Congress passed the Corporate Transparency Act (CTA) as an attempt to identify the owners of entities that could potentially be involved in money laundering and other illegal activities.Â
The Financial Crimes Enforcement Network (FinCent) was assigned by Congress to implement and enforce the Act. The reporting requirements of CTA go into effect in just a few weeks (January 1, 2024) and Fin Cen has yet to issue reporting forms, clear guidance on hundreds of questions, and the forms necessary to protect the identities of owners (Unique Identifier).
Small businesses provide nearly two thirds of all new jobs in the US, employ nearly 50% of all non-governmental employees. They carry 40% of non-governmental payroll. Yet, this group of business owners faces their very existence threatened by a new law with no provision for extended filing dates, a $500 daily non-filing penalty, a potential two-year felony prison term for non-filing and a total lack of awareness of the requirement to file this new form by the owners, their attorneys, or accountants.
Here are just a few of the potential problems neither Fin Cen nor Congress addressed in CTA:
- A single mom that sets up her own LLC on a state website, does her own tax return and has no attorney because she is trying to pay for rent and food for her children. She is not aware of CTA, cannot afford to hire an expert, wants to build a business, but unbeknownst to her, she is accruing a $500 daily non-filing penalty and potential prison time for not filing a form she never heard of and cannot figure out how to file as it must be filed electronically to Fin Cen. Multiply this example by ten million similar small businesses.
- The small business owner that somehow figures out, with their attorney or accountant, how to E-file the not yet released form, attaches a picture ID driver’s license as required and then 30 days later gets a new driver’s license to replace the old one. According to the image provided to Fin Cen, he must then file another copy within 30 days for any information that has changed or be in noncompliance again facing the penalty and possible prison time. Multiply this by one hundred million business owners that are being forced to file multiple forms for multiple small businesses that they own.
- The individual that owns 15 rental properties, each legally titled in a separate single member LLC. They are forced to file 15 separate forms, and if they move, they must file 15 more change forms within 30 days (as mandated) or face the same penalties and prison time.
- The small business that is owned exclusively by one person, but which allows two of the more experienced employees out of six employees to sign receipts and contracts. The owner must require filing information on these employees and include them in the Fin Cen forms or again face penalties and prison time.
- Along with tracking the amount of sales and number of employees in case these amounts drop below the requirements to now be required to file. There is no clear directions for the timing of those reporting requirements (i.e. within 30 days or at yearend).
This law will be devastating to the very existence of small business and indirectly to the US economy.
Congress needs to readdress these issues and find a more feasible solution to this matter.
Thank you.