5 ms·

US LLCs must file new report with Treasury FinCEN or risk prison

35 points by ruffrey 2y ago

ptliddle 2y ago
A Texas court just enacted a nationwide injunction on this. https://www.texasattorneygeneral.gov/news/releases/nationwide-injunction-blocks-unconstitutional-law-imposed-massive-costs-small-businesses https://www.texasattorneygeneral.gov/news/releases/nationwid...
- insane_dreamer 2y ago
  I'm not big on reporting, but arguing that the report is burdensome for small businesses is laughable. The BFOI takes 5-10 min to complete.
  - ilamont 2y ago
    For you and I and everyone else on HN, the report is indeed trivial. For many other small businesses, it is not. There are millions of businesses which still operate largely on paper invoices and registers. Owners can't understand the text of the BOI website or the technical requirements, which includes registering for Login.gov. Others are completely engrossed in their day to day operations and won't even hear about the dire warnings from an obscure federal agency. If they happen to check the Yahoo or Hotmail accounts they use for their business (often their personal communications too) they are just as likely to ignore it as spam. That leaves it up to local accountants to fill the gap. Many don't know, or aren't keeping track of this because it's not a tax thing. When I asked my accountant about it she didn't answer for more than a month, and then sent out an explanation to all of her clients along with the following message: If you want to engage us to prepare the BOI, our hourly rate is $250 will apply, with a one hour minimum. To minimize your fee, it is imperative for you to provide us with all the information required at once. Please contact our office if you wish us to prepare the BOI and we will send an engagement letter that will need to be signed and a list of documents we will need to prepare the BOI. Ignoring the $500 per day fines and threat of prison time, can you see how dealing with this is a non-starter for a lot of small businesses?
    - CharlieDigital 2y ago
      > There are millions of businesses which still operate largely on paper invoices and registers It was a really easy report to file. It was mostly about the ownership structure. A lot of scare tactics out there to make money, but filing it was just a few clicks and I had to get some info from my co-founder. I don't remember, but there's only like at most 10 screens and each is relatively short.
      - ilamont 2y ago
        Tell it to my 70 year old stone mason who doesn't have a computer, uses his phone only for making calls, only issues paper invoices and estimates, and only takes paper checks. Or the local restaurant owner from Guatemala in the nearest town who only takes cash, and has no mechanism for orders other than pointing at the menu or picking up the phone. A fact that seems to be lost on many tech people in coastal cities is technology literacy is limited. A 2016 OECD skills survey laid out the problem with very deep data across developed countries: https://www.oecd-ilibrary.org/education/skills-matter_9789264258051-en https://www.oecd-ilibrary.org/education/skills-matter_978926... If you want a summary, this stat should stand out: "26% of adults were unable to use a computer" https://www.nngroup.com/articles/computer-skill-levels/ https://www.nngroup.com/articles/computer-skill-levels/
        CharlieDigital 2y ago
        If you were a good Samaritan and actually concerned, you can literally sit down and finish this with them in a few minutes.
        bdangubic 2y ago
        you are 100% right... but "70 year old stone mason who doesn't have a computer" has to file taxes with the IRS. also "Or the local restaurant owner from Guatemala in the nearest town who only takes cash" also needs to file taxes with the IRS. this is as important of a thing as your Apr 15th deadline to file your returns. so this "low tech / no tech" really is a cop-out - if you are a business owner you have responsibilities or you'll get closed up or punished (or both) if you do not comply
  - Artistry121 2y ago
    I think you’re wrong. State, federal, local, speciality (food and alc), health, banking forms… as an entrepreneur there are already dozens of ways to screw up and miss something. Adding on extra things makes it easy to miss and adds on yet another burden. How many forms how many times a year do we need to fill out to be able to be free commercially? Are you free if you can be fined and thrown in jail for not filling out paperwork? It all adds up and doesn’t add any value.
  - encoderer 2y ago
    Yes it was not hard. But why are we adding draconian punishments for new business paperwork? Why are you ok with that part? Why shouldn’t this just be a fine? We really should not be ok with this if you wouldn’t personally be ok with a friend going to jail who failed to file. I, for one, am definitely not.
    - immibis 2y ago
      A fine is just a cost of doing business, and the kinds of entities that this targets would happily just pay the fine to continue being anonymous.
      - encoderer 2y ago
        This along with AML/KYC are the new war on drugs. Probably worse to be honest: a compliance regime that costs lawful businesses billions of dollars to navigate, always getting larger, always getting more draconian. It’s crazy we accept this. Where is the proof any of this is working at all?
  - moralestapia 2y ago
    Hey, I think I may have to file this report but have zero idea on how/where to do it. Could you share a source for that? My accountant wants $160 to do that for me. If I could do it in 5-10 minutes I would definitely do it myself. The problem that I have (and many other LLCs I'd guess) it's not that the report is complicated, it's that I (we) don't even know where to start ...
    - cbanek 2y ago
      https://fincen.gov/boi https://fincen.gov/boi you go here and follow the instructions. One of the easiest things to do, I did it myself.
      - moralestapia 2y ago
        Thanks!
- add-sub-mul-div 2y ago
  Ken Paxton brings lawsuits against everything, though. Does this one have any merit?
  - mminer237 2y ago
    This lawsuit was filed by a bunch of small entities, most importantly the Libertarian Part of Mississippi, but not including Ken Paxton, and a judge already granted the injunction, so at least he thinks it has merit. By the letter of the law, it's pretty clearly unconstitutional, but under the last hundred years of precedence of allowing almost anything under the commerce clause, it's less clear. The biggest issue with the CTA is definitely that it affects some non-profits. Arguing that requiring local non-profits to report their managers to the feds is "regulating interstate commerce" is a stretch for even the most liberal courts.
  - sjtgraham 2y ago
    Do you think a judge would grant a preliminary injunction without merit? To win a preliminary injunction you must show: 1. Likelihood of success on the merits 2. Irreparable harm without it 3. Balance of harms favors you 4. Injunction is in the public interest.
    - gamblor956 2y ago
      Or find a judge who will disregard that and rule on ideological grounds regardless of the facts and law...
      - sjtgraham 2y ago
        Which will the be appealed. The system has many layers of protection.
        deleted 2y ago
        [deleted]
    - deprecative 2y ago
- LorenPechtel 2y ago
  It doesn't make sense to me that a state court should be able to issue a nationwide injunction. And what's burdensome about it? (Now, a case could definitely be made for it being stupid duplicated effort. Every year I'm annoyed with FinCen over having to file a form about foreign accounts--almost all of the information also appears on our tax return. However, it's a minute or two of cut and paste once a year, no great burden.)
  - mminer237 2y ago
    It's not a state court. It was a federal judge in the Eastern Texas district: https://polsinelli.gjassets.com/content/uploads/2024/12/cta-v-garland-district-court-opinion-preliminary-injunction.pdf https://polsinelli.gjassets.com/content/uploads/2024/12/cta-...
  - sieabahlpark 2y ago
    [dead]
- travisporter 2y ago
  "In 2021, the 21-page Corporate Transparency Act was tucked into a sweeping 1,482-page defense bill passed by Congress over President Donald Trump’s veto." How?
Mr_Bees69 2y ago
every llc in the county has an address, why tf havent they just sent some mail?
gamblor956 2y ago
This was suspended by a federal judge. It's likely to end up becoming law eventually. The requirements of this rule are not burdensome and they are directly related to the laws that FinCEN was created to enforce. Also, we have information exchange treaties with multiple countries that require us to collect some of this information. We haven't been upholding our end of those treaties and this law was intended to bring us toward compliance.
- vetrom 2y ago
  While complying with our treaties as a nation is good and proper, those treaties remain subordinate to the Constitution. To the best of my knowledge, there is no verbiage in there that permits Congress to authorize a law for the mass collection of information, and the centralization thereof that is not directly pursuant to any of its enumerated powers. This doesn't even touch the government, as a whole's, less than stellar record as it comes to protecting PII from improper disclosure. CTA, as written and implemented, creates a wide array of real and potential harms. It's bad law, as it stands.
  - gamblor956 2y ago
    There's also no law that requires the IRS to give LLCs flow through tax treatment... The IRS could conform the treatment of LLCs to the way other limited liability entities are treated... as entities subject to taxation in their own right.
    - vetrom 2y ago
      Maybe they could. I am uncertain whether they would need legislation to do so. IMO that would arguably be the more correct option, but it would also remove the sort of information pool that can enable leakage or fishing expeditions the current law seems aimed to generate.
phendrenad2 2y ago
Does anyone have a real link to this? The current link just takes you to a random government site with zero information specific to a rule that you "must file new report" etc.

35 points by ruffrey 2y ago

A Texas court just enacted a nationwide injunction on this. https://www.texasattorneygeneral.gov/news/releases/nationwide-injunction-blocks-unconstitutional-law-imposed-massive-costs-small-businesses https://www.texasattorneygeneral.gov/news/releases/nationwid...

insane_dreamer 2y ago
I'm not big on reporting, but arguing that the report is burdensome for small businesses is laughable. The BFOI takes 5-10 min to complete.
- ilamont 2y ago
  For you and I and everyone else on HN, the report is indeed trivial. For many other small businesses, it is not. There are millions of businesses which still operate largely on paper invoices and registers. Owners can't understand the text of the BOI website or the technical requirements, which includes registering for Login.gov. Others are completely engrossed in their day to day operations and won't even hear about the dire warnings from an obscure federal agency. If they happen to check the Yahoo or Hotmail accounts they use for their business (often their personal communications too) they are just as likely to ignore it as spam. That leaves it up to local accountants to fill the gap. Many don't know, or aren't keeping track of this because it's not a tax thing. When I asked my accountant about it she didn't answer for more than a month, and then sent out an explanation to all of her clients along with the following message: If you want to engage us to prepare the BOI, our hourly rate is $250 will apply, with a one hour minimum. To minimize your fee, it is imperative for you to provide us with all the information required at once. Please contact our office if you wish us to prepare the BOI and we will send an engagement letter that will need to be signed and a list of documents we will need to prepare the BOI. Ignoring the $500 per day fines and threat of prison time, can you see how dealing with this is a non-starter for a lot of small businesses?
  - CharlieDigital 2y ago
    > There are millions of businesses which still operate largely on paper invoices and registers It was a really easy report to file. It was mostly about the ownership structure. A lot of scare tactics out there to make money, but filing it was just a few clicks and I had to get some info from my co-founder. I don't remember, but there's only like at most 10 screens and each is relatively short.
    - ilamont 2y ago
      Tell it to my 70 year old stone mason who doesn't have a computer, uses his phone only for making calls, only issues paper invoices and estimates, and only takes paper checks. Or the local restaurant owner from Guatemala in the nearest town who only takes cash, and has no mechanism for orders other than pointing at the menu or picking up the phone. A fact that seems to be lost on many tech people in coastal cities is technology literacy is limited. A 2016 OECD skills survey laid out the problem with very deep data across developed countries: https://www.oecd-ilibrary.org/education/skills-matter_9789264258051-en https://www.oecd-ilibrary.org/education/skills-matter_978926... If you want a summary, this stat should stand out: "26% of adults were unable to use a computer" https://www.nngroup.com/articles/computer-skill-levels/ https://www.nngroup.com/articles/computer-skill-levels/
      - CharlieDigital 2y ago
        If you were a good Samaritan and actually concerned, you can literally sit down and finish this with them in a few minutes.
      - bdangubic 2y ago
        you are 100% right... but "70 year old stone mason who doesn't have a computer" has to file taxes with the IRS. also "Or the local restaurant owner from Guatemala in the nearest town who only takes cash" also needs to file taxes with the IRS. this is as important of a thing as your Apr 15th deadline to file your returns. so this "low tech / no tech" really is a cop-out - if you are a business owner you have responsibilities or you'll get closed up or punished (or both) if you do not comply
- Artistry121 2y ago
  I think you’re wrong. State, federal, local, speciality (food and alc), health, banking forms… as an entrepreneur there are already dozens of ways to screw up and miss something. Adding on extra things makes it easy to miss and adds on yet another burden. How many forms how many times a year do we need to fill out to be able to be free commercially? Are you free if you can be fined and thrown in jail for not filling out paperwork? It all adds up and doesn’t add any value.
- encoderer 2y ago
  Yes it was not hard. But why are we adding draconian punishments for new business paperwork? Why are you ok with that part? Why shouldn’t this just be a fine? We really should not be ok with this if you wouldn’t personally be ok with a friend going to jail who failed to file. I, for one, am definitely not.
  - immibis 2y ago
    A fine is just a cost of doing business, and the kinds of entities that this targets would happily just pay the fine to continue being anonymous.
    - encoderer 2y ago
      This along with AML/KYC are the new war on drugs. Probably worse to be honest: a compliance regime that costs lawful businesses billions of dollars to navigate, always getting larger, always getting more draconian. It’s crazy we accept this. Where is the proof any of this is working at all?
- moralestapia 2y ago
  Hey, I think I may have to file this report but have zero idea on how/where to do it. Could you share a source for that? My accountant wants $160 to do that for me. If I could do it in 5-10 minutes I would definitely do it myself. The problem that I have (and many other LLCs I'd guess) it's not that the report is complicated, it's that I (we) don't even know where to start ...
  - cbanek 2y ago
    https://fincen.gov/boi https://fincen.gov/boi you go here and follow the instructions. One of the easiest things to do, I did it myself.
    - moralestapia 2y ago
      Thanks!
add-sub-mul-div 2y ago
Ken Paxton brings lawsuits against everything, though. Does this one have any merit?
- mminer237 2y ago
  This lawsuit was filed by a bunch of small entities, most importantly the Libertarian Part of Mississippi, but not including Ken Paxton, and a judge already granted the injunction, so at least he thinks it has merit. By the letter of the law, it's pretty clearly unconstitutional, but under the last hundred years of precedence of allowing almost anything under the commerce clause, it's less clear. The biggest issue with the CTA is definitely that it affects some non-profits. Arguing that requiring local non-profits to report their managers to the feds is "regulating interstate commerce" is a stretch for even the most liberal courts.
- sjtgraham 2y ago
  Do you think a judge would grant a preliminary injunction without merit? To win a preliminary injunction you must show: 1. Likelihood of success on the merits 2. Irreparable harm without it 3. Balance of harms favors you 4. Injunction is in the public interest.
  - gamblor956 2y ago
    Or find a judge who will disregard that and rule on ideological grounds regardless of the facts and law...
    - sjtgraham 2y ago
      Which will the be appealed. The system has many layers of protection.
      - deleted 2y ago
        [deleted]
  - deprecative 2y ago
LorenPechtel 2y ago
It doesn't make sense to me that a state court should be able to issue a nationwide injunction. And what's burdensome about it? (Now, a case could definitely be made for it being stupid duplicated effort. Every year I'm annoyed with FinCen over having to file a form about foreign accounts--almost all of the information also appears on our tax return. However, it's a minute or two of cut and paste once a year, no great burden.)
- mminer237 2y ago
  It's not a state court. It was a federal judge in the Eastern Texas district: https://polsinelli.gjassets.com/content/uploads/2024/12/cta-v-garland-district-court-opinion-preliminary-injunction.pdf https://polsinelli.gjassets.com/content/uploads/2024/12/cta-...
- sieabahlpark 2y ago
  [dead]
travisporter 2y ago
"In 2021, the 21-page Corporate Transparency Act was tucked into a sweeping 1,482-page defense bill passed by Congress over President Donald Trump’s veto." How?

Mr_Bees69 2y ago

every llc in the county has an address, why tf havent they just sent some mail?

gamblor956 2y ago

This was suspended by a federal judge. It's likely to end up becoming law eventually. The requirements of this rule are not burdensome and they are directly related to the laws that FinCEN was created to enforce. Also, we have information exchange treaties with multiple countries that require us to collect some of this information. We haven't been upholding our end of those treaties and this law was intended to bring us toward compliance.

vetrom 2y ago
While complying with our treaties as a nation is good and proper, those treaties remain subordinate to the Constitution. To the best of my knowledge, there is no verbiage in there that permits Congress to authorize a law for the mass collection of information, and the centralization thereof that is not directly pursuant to any of its enumerated powers. This doesn't even touch the government, as a whole's, less than stellar record as it comes to protecting PII from improper disclosure. CTA, as written and implemented, creates a wide array of real and potential harms. It's bad law, as it stands.
- gamblor956 2y ago
  There's also no law that requires the IRS to give LLCs flow through tax treatment... The IRS could conform the treatment of LLCs to the way other limited liability entities are treated... as entities subject to taxation in their own right.
  - vetrom 2y ago
    Maybe they could. I am uncertain whether they would need legislation to do so. IMO that would arguably be the more correct option, but it would also remove the sort of information pool that can enable leakage or fishing expeditions the current law seems aimed to generate.

phendrenad2 2y ago

Does anyone have a real link to this? The current link just takes you to a random government site with zero information specific to a rule that you "must file new report" etc.