I will be pausing all payments on here until I can ensure I'm fully tax-compliant with the shiny new ""Corporate Transparency Act"".
Turns out, entrepreneurship is surprisingly even tougher than it looks.
I recently got an email from one of my article subscriptions featuring this lovely message:
The Corporate Transparency Act (CTA), which goes into effect on January 1, 2024, requires otherwise unregulated companies to report information about "beneficial owners"—those who own at least 25% of or exercise substantial control over the reporting company—to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). Failure to comply could result in fines of up to $10,000 and imprisonment for up to two years.
The substantial control attributed to beneficial owners could be serving as a senior officer, having the authority to appoint or remove senior officers, serving on a board of directors, having rights associated with financing arrangements, or overseeing intermediary entities that exercise substantial control over the business.
While this means a trust technically could be beneficial owner, the CTA states that beneficial owners must be individuals. Therefore, the trust document would need to be reviewed to determine whether the grantor, trustee, or beneficiaries are considered beneficial owners.
What does this mean for my little blog? Well, to be perfectly honest, I have no clue. Until the challenges work their way through the Appeals Courts (and maybe SCOTUS in the event they grant cert), I may be disabling paid subscriptions (before getting a single one!).
Here’s the update tacked to the top of the article:
Litigation Update: A federal district court recently ruled that the Corporate Transparency Act (CTA) is likely unconstitutional, placing a temporary ban on enforcement of the CTA. The Financial Crimes Enforcement Network (FinCEN) has agreed to suspend the mandatory reporting requirements of beneficial ownership information required by the CTA until the resolution of the ongoing litigation.
The federal government has filed an appeal to the United States Court of Appeals for the 5th Circuit, and the appeals court could decide to stay the district court's ruling, which would mean that the CTA—including the mandatory reporting requirements—could be enforced while we await a possible future trial to decide the fate of the CTA. Because of the uncertainty, we believe business owners affected by the CTA should continue to prepare to comply with the new law's reporting requirements.
Until I can see a financial professional, I don’t feel comfortable leaving things as-is.
Thanks for your understanding.
