I am, and always have been, a big fan of surprises. The good surprises, I mean — things liking finding an extra $20 in your jeans pocket, or having a friend say, “Drinks are on me.” These always bring a smile to my face (even though the latter sometimes leads to regrettable life choices on my part). But I digress.
However, what I don’t like are the “surprises” I normally encounter the first few months of each new year. Now, to be honest, I can’t really call these things surprises, as most are regulatory, and notice has been given that the new regulation or requirement will be going into effect. I know, I know — they told me these things were coming, but it’s the federal government. After a lifetime of dealing with them, why on earth would I take their timeline seriously? (Yes, you are correct; this position makes me both cynical and lazy. To this I say … well, nothing, because I am too lazy to disagree.)
The most recent surprise/but-not-really-a-surprise that’s going to have a big impact on the trucking industry is a little thing called the Corporate Transparency Act.
The Corporate Transparency Act (CTA) was enacted in 2021 and went into effect Jan. 1, 2024. The goal of the CTA is to catch things like tax fraud, money laundering and financing of terrorism by gathering additional ownership information on certain U.S. businesses that are operating in or access the country’s market. According to Congress, the CTA will prevent folks from hiding or benefiting from ownership of U.S. businesses to conduct illegal operations. Per Congress, this is a widely used tactic by bad actors that impacts national security and economic integrity.
I gotta say, I am very much on the anti-terrorism side of the equation, and all this sounds like a good idea. However, how does it work?
Well, I’m glad you asked!
As of Jan. 1, 2024, damn near all small businesses are required to file a Beneficial Owner Information (BOI) report with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) identifying individuals associated with the reporting company.
“Well, great,” you say. “But is this going to impact me?”
Unfortunately, the answer is most likely a big fat yes!
As we all know, many owner-operators and small carriers operate as single-member LLCs or other types of business entities. Ding-ding-ding! If you operate such an entity in the U.S., the CTA says, “You’re a winner!” You will need to file a BOI. Lucky you.
“OK, so I need to file. What information is required?” you ask.
Let’s keep it simple. If your business was created during 2024 you will need to include just the basics (place tongue in cheek here). Those “basics” include beneficial owners (those owning over 25% interest in the entity) and applicant’s names, addresses, birthdays, identification numbers (such as driver’s license or passport number) and the jurisdiction of the documents. In addition, all reporting companies must provide their legal name and trademarks, the current U.S. address of its main business site (or if it’s a foreign company, the operational U.S. location), the taxpayer identification number and the jurisdiction where the entity was formed or registered.
In a show of kindness, companies formed before Jan. 1, 2024, can omit the requirement of identifying company applicants. Wheeeeee.
“Good grief, that’s a lot of info to report! But OK. When and how do I report it?” you ask.
Trucking entities created before Jan. 1, 2024, must file the report before Jan. 1, 2025. That seems easy enough.
However, entities created AFTER Jan. 1, 2024, must file a BOI report within 90 DAYS OF THE CREATION OF THE ENTITY. This is a good reason to keep your calendar updated.
Now to play the devil’s advocate, let’s say you get busy and forget to file a BOI. What will happen?
The answer is nothing good. Failure to comply with the filing deadline can result in both civil and criminal penalties. Civil penalties include a fine of up to $500 for each day the violation continues. Criminal penalties can include up to two years of imprisonment and a fine up to $10,000.
As you can see, the penalties are substantial. In addition, running a small business is hard work and time-consuming. With the importance of complying with this new law, you may want to work with a qualified third party, such as a law firm or accounting firm, to make sure the required information submitted is both correct and that it’s submitted in a timely manner.
Of course, there are a few exemptions to the CTA, and this article does NOT contain all the details (remember my earlier comment about being lazy?) so I suggest you review the CTA yourself or consult with a professional.
Brad Klepper is president of Interstate Trucker Ltd., a law firm entirely dedicated to legal defense of the nation’s commercial drivers. Brad is also president of Driver’s Legal Plan, which allows member drivers access to his firm’s services at discounted rates. For more information, contact him at (800) 333-DRIVE (3748) or interstatetrucker.com and driverslegalplan.com.
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