LLC Owners. What's this FinCEN thing about?

SixPapaCharlie

SixPapaCharlie

May the force be with you
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First Officer 6PC
I assume a lot of you are LLCs given that you are all wealthy pilots.

A friend messaged me and said "Have you seen this?" Followed by some talk of a $500 / day fine if not filled out.
I don't read, understand, or speak legalese. I would assume if there were some action needed for LLCs under the threat of a $500 / day fine, it would be all over the place and not just someone on social media messing people.

More info here:
www.hogefenton.com

New Act Imposes Penalties on Family Partnerships, LLCs, and Corporations

Starting January 1, 2024, existing and newly formed limited partnerships, limited liability companies, and corporations will be required to report certain ownership and management information to the Federal Financial Crimes Enforcement Network (“FinCEN”). Adverse consequences for non-compliance...
www.hogefenton.com www.hogefenton.com

Am I the only one that didn't get the memo or is this not really a big deal?
 
My understanding is that it was put in place to provide transparency of the actual ownership of an LLC. The motivation came about due to people forming an LLC in a low tax state (i.e. Nevada) but in fact operate in a high tax state (i.e. Kalifornia) Then paying taxes to the low tax state, thus evading the higher tax state levy. But I am not an accountant , lawyer or any of those important professions. So, I could be completely FOC. Just fill out the form.
 
Morgan3820 said:
My understanding is that it was put in place to provide transparency of the actual ownership of an LLC. The motivation came about due to people forming an LLC in a low tax state (i.e. Nevada) but in fact operate in a high tax state (i.e. Kalifornia) Then paying taxes to the low tax state, thus evading the higher tax state levy. But I am not an accountant , lawyer or any of those important professions. So, I could be completely FOC. Just fill out the form.
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Not my understanding. Mostly this is to identify who actually owns the corporation to figure out things like money laundering. The taxation issue is a state thing and knowing the identiy of the principals doesn't really help or matter. A Californian is free to own a Nevada corporation. But any corporation that operates in California, regardless of where it is registered, owes the franchise tax. The states usually chase this down by finding out who has nexus (or is it situs, I always get those confused) in the state. Similar situation for sales tax collection.
 
Bryan, looking at that link you sent, it says filings must be complied with by January 1st, 2025, for entities created before January 1st, 2024. Looking at the actual FinCEN website, it said they only started accepting reports January 1st, 2024.

It also says fines are "up to" [large amounts]. I wouldn't be worried about it. It also may not end up getting enforced for little folks who can only launder enough for a Comanche like you. They're more interested in Gulfstream level laundering. Time to report so you can up your game!
 
flyingron said:
Not my understanding. Mostly this is to identify who actually owns the corporation to figure out things like money laundering. The taxation issue is a state thing and knowing the identiy of the principals doesn't really help or matter. A Californian is free to own a Nevada corporation. But any corporation that operates in California, regardless of where it is registered, owes the franchise tax. The states usually chase this down by finding out who has nexus (or is it situs, I always get those confused) in the state. Similar situation for sales tax collection.
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I thought that was what I said. Guess not
 
SixPapaCharlie said:
I assume a lot of you are LLCs given that you are all wealthy pilots.

A friend messaged me and said "Have you seen this?" Followed by some talk of a $500 / day fine if not filled out.
I don't read, understand, or speak legalese. I would assume if there were some action needed for LLCs under the threat of a $500 / day fine, it would be all over the place and not just someone on social media messing people.

More info here:
www.hogefenton.com

New Act Imposes Penalties on Family Partnerships, LLCs, and Corporations

Starting January 1, 2024, existing and newly formed limited partnerships, limited liability companies, and corporations will be required to report certain ownership and management information to the Federal Financial Crimes Enforcement Network (“FinCEN”). Adverse consequences for non-compliance...
www.hogefenton.com www.hogefenton.com

Am I the only one that didn't get the memo or is this not really a big deal?
Click to expand...
Reminds me of the if you declare a loss on schedule C thing from many moons ago. You could expect about a 50/50 chance, or more, of being audited if you did. Dishonestly taking advantage of a loophole was being closed. Looks like another loophole is under scrutiny.
 
Morgan3820 said:
I thought that was what I said. Guess not
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That's not what you said. You said it was to key in state tax issues. It's not. The feds don't give a hoot if California gets their tax revenue or not.
 
More meaningless paperwork. We already have to do that to open bank accounts, so the bank can do their AML/KYC due diligence.
 
So money launderers and corporate shell gamers will just multiply the number of LLCs by 5, to fall under the 25% ownership reporting threshold. Good work, FinCEN.

At least it's a one-time filing unless things change.
 
Silly government, once you build a better mousetrap, the mice who push the envelope will get smarter...

Just give up and leave us be...
 
Simple stuff guys. The IRS is looking for cheaters and FBI, DEA, Secret Service ect. is looking for money laundering.
 
If you own a corporation not on the excluded list you have to report who as beneficial interest in the company, who controls it, supposedly this is about identifying money laundering, just wait same thing is coming on real estate.

More government snooping is what it really is and yes an LLC Inc that owns a plane has to report who controls the company, so much for privacy
 
midlifeflyer said:
FWIW, here's FinCEN's FAQ page on the requirements and the current version of their (57-Page!!!) Small Entity Compliance Guide. I just ran through the process with a pretend company (without submitting it) and it was easy and straight-forward.
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That's more reading than I have done in my lifespan thus far.
Is there an online form where I can just click some radio buttons, click submit and go back to being a guy that doesn't read legal jargon.
 
SixPapaCharlie said:
That's more reading than I have done in my lifespan thus far.
Is there an online form where I can just click some radio buttons, click submit and go back to being a guy that doesn't read legal jargon.
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Yes. https://boiefiling.fincen.gov. It's a fairly simple form.

But remember that if the company existed at the end of the 2023, it's not due until the end of this year. I'm checking with one of the AOPA in-house lawyers to find out whether they have or plan to write up a guide for aircraft ownership entities. (I'm like 99 and 44/100% pure retired now but was thinking of writing something up for my former clients but wourd rather not re-invent the wheel)
 
midlifeflyer said:
I'm checking with one of the AOPA in-house lawyers to find out whether they have or plan to write up a guide for aircraft ownership entities.
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Well, I did the Google thing and found this. I thought it was too complicated and not particularly helpful. I may have to write somehting up after all.
 
I just completed the process for both my LLCs. One LLC actually qualified for the inactivity exemption but after digging deeper elected to complete the BOI for it too. 15 minutes tops.
 
midlifeflyer said:
Yes. https://boiefiling.fincen.gov. It's a fairly simple form.

But remember that if the company existed at the end of the 2023, it's not due until the end of this year. I'm checking with one of the AOPA in-house lawyers to find out whether they have or plan to write up a guide for aircraft ownership entities. (I'm like 99 and 44/100% pure retired now but was thinking of writing something up for my former clients but wourd rather not re-invent the wheel)
Click to expand...

Thank you Sir.

World's Greatest Pilot LLC Thanks you too!
 
Bell206 said:
I just completed the process for both my LLCs. One LLC actually qualified for the inactivity exemption but after digging deeper elected to complete the BOI for it too. 15 minutes tops.
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If your companies don’t own anything, why have them?
 
midlifeflyer said:
If your companies don’t own anything, why have them?
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I’m about to form a new LLC that won’t own anything. I’ll be doing contract consulting, and many companies don’t want to send 1099s - they want to write checks to a company so there’s never any question about whether or not you’re an employee.
 
DaleB said:
I’m about to form a new LLC that won’t own anything. I’ll be doing contract consulting, and many companies don’t want to send 1099s - they want to write checks to a company so there’s never any question about whether or not you’re an employee.
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I guess I don't see how it qualifies as an inactive entity. But none of my business and you decided to do it anyway. And maybe I'm reading too into it when I'm thinking that a company being paid for work performed is engaged in active business and holds assets.
 
He (and I) has until the end of the year (2024) to file the form. And, if like me, he is a sole proprietorship its no big deal.

Edit: I filled it out and sent it in. It was a total "nothing burger".
 
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midlifeflyer said:
I guess I don't see how it qualifies as an inactive entity. But none of my business and you decided to do it anyway. And maybe I'm reading too into it when I'm thinking that a company being paid for work performed is engaged in active business and holds assets.
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I never said it would be an inactive entity, I was just illustrating one case (and a pretty common one in the freelance consulting world, I think) where the LLC would hold no assets. I’ll absolutely have to file for it, as well as the other LLC which does have assets.
 
US District judge in Alabama ruled the CTA unconstitutional. The ruling solely applies to the plaintiffs in the case though.

www.forbes.com

Corporate Transparency Act Ruled Unconstitutional by Federal District Court

The Corporate Transparency Act sparked a debate on balance between regulatory oversight and constitutional freedoms. This District Court ruling while a triumph for small business interests and constitutional advocates, also prompts reflection on the future of anti-money laundering measures.
www.forbes.com www.forbes.com
 
I’m guessing this is so poorly communicated they’ll get less than 10% compliance. I’ll be dead before they figure it out. Not concerned.
 
My accountants offered to fill it out while suggesting I do it myself and send them a screen shot of the final completion page. Encouraged me by saying that's what most of their other clients are doing. For me it ended up being about 10 minutes each and they wanted one per LLC. Not sure if I did it all exactly right, but the process makes me equally unsure whether anyone is ever going to care. Mostly just filling out name address and SS#, and the rest of the time shaking your head at how clumsy and ugly the government can make a simple online form.
 
For those who don't care, and just want to fill it out, it's not a complicated deal, and choosing to send the info in is a personal decision. However, some of us control one or more LLC, and personally, I find the whole thing far beyond the enumerated powers we give the govt. So, I chose not to comply. We'll see if I get ass-reamed for remaining silent about ownership of corp assets. Doubt it.
 
I’m sure the gubment will file an appeal to the 5th Circuit. My wife worked in the clerk’s office for about 10 years. It was and is still a conservative and pro business court. I would easily lay a bet that the original ruling will be upheld. Of course, then it will be sent to the SCOUTUS which, if they take up the case, will again hold up the original ruling. I also was holding out until the Texas case was ruled on. Glad I did. :) :happydance:
 
The FinCEN website is also saying that the requirement is suspended. From their website:

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