December 31, 2024. A deadline which most Americans who run a business need to be aware.  In last month’s Wyoming Ag, Kelly Carpenter had an article about the Corporate Transparency Act.

This Act came about through the National Defense Authorization Act in 2021.  The Act created a requirement that businesses must file beneficial ownership information with the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN).  The purpose for requiring US businesses to do this was, like most laws that come into existence, because of the need to prevent criminal activities. In this case the criminal activities of concern are money laundering, corrupt financial transactions and financial terrorism.  Of course, this means non-criminal businesses must now submit ownership information to the Department of Treasury.   While this process is supposed to happen through their website, many of the folks in the private sector are complaining the website cannot handle the traffic necessary for an estimated 32 million plus businesses.

Of course, many folks are a bit apprehensive about sending private information to an agency of the federal government called Financial Crimes Enforcement Network to reside in one of their databases. The other aspect of this law is the requirement that whenever something changes, i.e. an address change or an officer of the business changes, you’re required to update your information with FinCEN.

So, what happens if you don’t update your information or put things in wrong?  Well, that is when things could get interesting.  The rules use the term “willfully” as willfully providing false or fraudulent beneficial ownership information or if you willfully fail to report.  Because this is so new, we don’t know how they will interpret “willfully” but if they do find you’ve willfully done or not done something the civil penalties can be up to $500 for each day the violation continues.  So, if you don’t file before the deadline and you’ve read the Wyoming Ag article will FinCEN consider that a willful violation? If they discover next May that you’ve not filed, then your civil penalty could be $60,000.   Well $60,500 if it is a leap year. If the family forgets to amend their corporation information after a family member passes away, then again, they can face substantial fines on top of all the other things that are going through their mind. FinCEN can also levy criminal penalties of up to two years in prison on top of the civil penalty.

These penalties are significant.  We are all aware of how a federal agency can utilize punitive penalties against its citizens.  After all it hasn’t been that long ago the Environmental Protection Agency and the Corp of Engineers levied a multi-million dollar fine against one of our Wyoming citizens in Uinta County.  

We’re grateful that an effort is being made to repeal the Corporate Transparency Act (H.R. 8147) led by Rep. Warren Davidson from Ohio and cosponsored by 16 other House members. Given Rep. Hageman’s battles against some of these federal agencies, it’s not surprising she is one of the cosponsors.

Undoubtedly there are criminals who take advantage of our laws, but the solution isn’t to burden our own business owners and threaten them with possible criminal penalties and punitive fines if they make a reporting mistake.  Even if they are found to have not violated this Act, the business will undoubtably have to spend thousands of dollars in legal fees to defend themselves.