FinCEN marches on, and the American small business is being sucked into the trap. Beneficial Ownership Interest Registration is going to be a nightmare. Any time any tiny piece of information concerning any one owner changes, the company and its owners have 30 days to update the information.
There isn’t any way to “unregister” an individual. Once you are in the FinCEN system with your own FinCEN number, you are there forever. It doesn’t matter whether you are still a business owner or not. You have to maintain your information forever.
If the information isn’t updated within the 30 days, you are subject to the $500/day fine, plus the $10,000 penalty, plus the two years in jail.
That means you as an individual will almost certainly slip up, and all small companies will ultimately slip up.
The government can basically use the Corporate Transparency Act (the act defining FinCEN and the BOIR system) to selectively make life hell and take out anyone they wish. This is a pessimistic view, but a realistic view of what is going to happen.
The burden of compliance may become significant, particularly for growing businesses. Because of the penalties associated with noncompliance, compliance is critical, but it carries a cost. CTA compliance costs are estimated to be a substantial financial burden, particularly on small businesses.
FinCEN itself estimates that the total cost of filing BOIRs in 2024 will be approximately $22.7 billion, with 126.3 million total “burden hours” spent trying to comply.
At this point, the only thing you can do is hope for a government that squashes this overreach. The federal courts have said the CTA is totally unconstitutional, and yet FinCEN is moving full steam ahead no matter what the courts say. This is an egregious example of the government simply saying it doesn’t care what the courts say, because it is above the law. Who is going to stop them?
Just for your curiosity, the CTA is said to be a bipartisan legislative piece. The Act passed with 224 Democrats voting for it and 5 against it; 25 Republicans voted for it and 167 against it.
The current trajectory is that the Federal Government is going to crush small businesses with regulations. Over 25% of the cost of building a house today is spent on government regulation compliance. Government overregulation will put many out of business and drive costs of doing business through the roof, if we can still afford a roof over our heads.
I am still recommending that you wait until the fourth quarter, but we all need to prepare to make all of our registrations in the fourth quarter of 2024. Don’t forget to register.
Lee Phillips, JD
United States Supreme Court Counselor
Lee will be teaching a Master Class November 16th, 2024 on Estate Planning
More articles from Lee
- Master Class Nov 16 2024: Create Real Generational Wealth with Estate Planning – Featuring Lee Phillips
- Lee Phillips Reminds us of the FinCEN Deadline
- Lee Phillips on Two Ways to Avoid Probate of an LLC or Small Business
- When and How to Update Your Living Revocable Trust
- Lee Phillips on a Will Vs an Estate Plan
