Gee, I can’t understand why people hate the federal government so much!
Have you heard about the new Beneficial Ownership Information (BOI) requirements? This is a new mandate by the feds to try and stop money laundering and financial fraud. If you are a “beneficial owner” of a corporation, limited liability company or any type of corporate entity that is registered with the Secretary of State of your state, you are required to file a BOI report with the Financial Crimes Enforcement Network (FinCen). If you just own just 1% of an LLC, under the rules, you may be a beneficial owner. Your LLC, Sub-S, C-Corp, plus a number of other entities are all required to file a BOI, and if it doesn’t do so before January 1, 2025, the feds can fine your entity $500 per day and put you in jail for two years. Making this even more fun, it is a giant pain in the ass to file the report.
What is a beneficial owner? A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests. What does “directly” mean? What does “indirectly” mean? What does “substantial control” mean? One can own 1% of a company and exercise substantial control. Suppose a corporate entity owns another part of the reporting entity? If you want an answer to this and other questions, you can go online and read through several hundred “frequently asked questions,” hundreds of pages on FinCen guidelines and regulations, along with a host of titillating articles written by third parties, and at the end of this laborious process, there still will be no clear answers. Indeed, if you have a specific question relating to your particular circumstances, you can spend 5 hours reading through a billion pages of poorly written government-speak, and at the end of this process, you likely still won’t have a definitive answer to your question.
What are the two biggest weenie professions in America? Ding! Ding! Ding! Right answer! Accounting and law! Many accounting and law firms don’t want to touch doing this work due to liability concerns. How can any firm know who directly or indirectly exercises substantial control over any entity? I reckon you can find a few law firms who will file your BOI report for you, but only after you pay a fat upfront retainer, sign a 25-page engagement letter, and absolve them of all liability. However, this assumes that all the members or shareholders all agree on whether or not they are beneficial owners. Obviously, no one at FinCen has ever run a business with multiple owners! Thinking that all members of the corporate entity will all happily agree which ones of them directly or indirectly exercises substantial control is laughable and a perfect example of regulatory ignorance of real-world issues. All “beneficial owners” have to be on the same reporting form, everyone must list his personal information and scan a verifiable ID, like a passport. All of this is uploaded onto FinCen’s website. Making this even more fun are the people who write directions for interactive government websites! The website’s directions are both abstruse and obtuse. Too much unintelligible government-speak and not enough pointed and direct clarity.
This new mandate is effectively a “tax” not legislated by Congress. Even if you pay a fee to have a professional do this for you, you will still have to devote “time and energy” to this endeavor. In this respect, and if you do it yourself, it’s no different than the government telling you that you must go out to the fields and pick cotton in the hot sun for at least 8 hours before January 1, 2025. If not, we will throw you in jail for 2 years! I’d rather pick cotton for a whole week in 110-degree heat with no water than file just one of these godawful headaches.
So Mr. Government Bureaucrat: I realize that you’ve never owned a business, and have no idea how things work in the “real world,” but getting members of a corporate entity all together to all agree on anything ain’t easy, and no one wants to list their name on your stupid ass form along with all their personal information. No one trusts you, and everyone feels that it is inevitable that no matter how honest they are, nothing good is going to come out of complying with your Soviet style intrusion into their life. The hesitancy to fill out these reports derives from everyone’s understanding of the nature of federal employees. Bureaucracies always expand and to do so employees need to make work for themselves, and what better way to do so than to use the information on BOI reports to harass business owners?
This new regulation only penalizes the honest and law abiding. Those actually engaged in laundering money are not going to give Uncle Sam a road map that leads directly to them and their bank accounts! Duh! Being the sneaky sh#t that I am, I’ve already thought of the many ways the criminal class will evade BOI reporting. Is it logical to think that federal bureaucrats will focus their money laundering activities on the beneficial owners listed on BOI reports and totally ignore the real bad guys who are not telling the feds who they are? Yes, it is.
Might these BOI reports be used to target political enemies? Hunter Biden has had over 167 suspicious activity reports (SARs) filed with the Treasury Department concerning overseas wire transfers dealing with an array of LLCs, yet the Department of Justice and the FBI under this administration has shown no interest in who the beneficial owners are of his criminal enterprises. Ah, but rest assured if you are a soccer mom who speaks up at your local school board meeting objecting to grown men dressing up as women and loitering in your 7th grade daughter’s school restroom, the federal Stasi must know everything about you!
The dismantling of the administrative state cannot come soon enough. I’d like to see 70% of DC federal employees fired. For every hour they have abused us, they must spend an equal amount of time in a stockade on the Washington Mall. The rest of us then get the right to scream obscenities and throw rotten fruit at them. But that’s not enough! Remember when the Roman General Scipio Aemilianus burned Carthage, plowed over its ruins and sowed salt in the soil?
Seems like a good idea for the Washington suburbs.
