Kenny Dettman comes from a 15-year background of working as a global tax expert, CEO, Founder, and Operator. He previously worked as a Managing Director at Alvarez & Marsal.
More recently, he founded and led EZ-ERC who is an industry expert and pioneer within the Employee Retention Tax Credits. Kenny is a member of the Forbes Business Council and has been published in the Wall Street Journal.
Frank Tumminello
Frank Tumminello comes from a decade-long background of working in the financial services and technology industry. Prior to FileForms, he was an investor, acquirer, and value-creation resource in several financial services, insurance, and healthcare businesses throughout his private equity, corporate development, and investment banking career.
Frank began his career at Raymond James, followed by Oppenheimer & Co. and Century Equity Partners. Most recently, he led a pre-tax healthcare benefits third-party administrator through eight successful acquisitions and a majority recapitalization with a multi-billion-dollar private equity firm. Frank holds his Bachelor of Science in Physics from Bates College, where he minored in Mathematics and wrote a year-long thesis in Computer Science.
About FileForms
FileForms is the trusted software partner for filing federal and state forms and reports on behalf of businesses and their advisors. Its flagship product is a reporting solution for the Beneficial Ownership Information (BOI) report, a new federal filing requirement resulting from the Corporate Transparency Act (CTA) that is enforced by the Financial Crimes Enforcement Network (FinCEN), expected to impact more than 35 million U.S. businesses.
The FileForms team is unwaveringly dedicated to revolutionizing the process of preparing and submitting the growing number of federal and state reporting obligations, such as the BOI report, which extend beyond traditional IRS and state tax filings. FileForms had developed a cutting-edge technology platform led by its accomplished executive team to holistically bring ease and accuracy to the compliance requirements of businesses and their advisors.
The Unauthorized Practice of Law and the Corporate Transparency Act
By FileForms | December 28, 2023
The Corporate Transparency Act (CTA) was enacted in 2021 to mitigate illicit financial activities by requiring most companies that conduct business in the U.S. to report specific information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
FinCEN is a bureau of the U.S. Treasury whose mission is to combat financial crimes by collecting and analyzing information about financial transactions to combat money laundering, terrorist financing, and other financial crimes. The CTA’s reporting requirements take effect on January 1, 2024, and the implications for U.S. business owners and their professional service providers are far-reaching.
Beneficial Ownership Information (BOI) Reporting
Unbeknownst to most business owners and even their trusted advisors, BOI reporting is a novel informational filing that will impact approximately 36 – 40 million businesses in the U.S. Certain companies formed before January 1, 2024, who do not qualify for an exemption must file their initial report by January 1, 2025.
New companies formed after January 1, 2024, only have 90 days from formation to file their initial BOI report. Time is of the essence, and U.S. business owners will undoubtedly turn to their professional service providers for guidance and assistance with this new filing requirement. It’s imperative for business advisors to understand their responsibilities and limitations in assisting their clients with CTA compliance.
While BOI reporting may be viewed as a tax filing, it is not administered by the Internal Revenue Service (IRS) and is subject to different rules and regulations. One of the most essential concepts for nonlawyer professional service providers to be aware of is the Unauthorized Practice of Law (UPL).
The UPL rules dictate what services nonlawyers such as CPAs, tax professionals, and registered agents may provide their clients. Any nonlawyer engaging in UPL may be subject to civil penalties, including fines, loss of licensure, or the ability to practice. Further, nonlawyers cannot collect professional fees directly from their clients for providing such services.
Depending on the severity of UPL violations, practitioners may even be subject to criminal penalties, including jail time.
What is UPL?
The premise of UPL rules is to protect consumers and ensure that practitioners render competent and ethical legal advice aligned with their clients’ interests. However, the Courts have issued many vague opinions over the years that have not concisely defined the practice of law. To determine whether a nonlawyer professional has engaged in UPL, courts have applied tests focusing on the following:
The difficulty of the services rendered;
Whether such services are incidental in form; or,
The services impact on the recipient’s legal rights.
This is intended to provide an overview of the UPL rules and their implications for practitioners. A detailed discussion of the various Courts’ interpretations of UPL over the years is beyond the scope of this article. However, professional service providers should be aware that the UPL rules are complex and vary in each jurisdiction[1].
While some states hold that the practice of law is anything that lawyers do,[2] others merely list activities that constitute the practice of law.[3] Due to the differing views of the States and federal laws that don’t provide a concise definition of UPL, nonlawyers must frequently collaborate with the appropriate legal professionals to ensure they do not inadvertently engage in UPL.
Multidisciplinary Practices (MDPs)
Professional service firms that offer their clients a wide array of professional services are referred to as multidisciplinary practices. Such practices may employ various professionals, including but not limited to lawyers, accountants, registered agents, and financial advisors. Each of these professionals must understand their roles, responsibilities, and especially the limitations of the services they provide their clients.
CPAs, in particular, enjoy certain freedoms due to their strict licensing requirements that encourage competent and ethical practices by licensed CPAs and the staff accountants who assist them. CPAs who pass an additional test may even represent their clients in the U.S. Tax Court.
However, CPAs must still be wary of crossing the line and providing legal advice to their clients. When in doubt, it would be prudent for CPAs to consult or collaborate with an attorney.
Application of UPL to the Corporate Transparency Act
The complexity of a BOI report will vary greatly depending on the nature of the client’s structure and industry. Consider a simple example: a small pizza shop organized as a single-member limited liability company (LLC) in Florida with only three employees and $250,000 in annual revenue. The business owner’s CPA could easily determine that the business does not qualify for an exemption and may collect the necessary information and file the BOI report on behalf of the business. This would be well within the CPA’s capabilities and would not be considered UPL.
However, if a private equity firm engages a CPA to prepare the BOI reports for hundreds of portfolio companies operating in various industries, this requires substantial analysis and a deep understanding of the CTA and the associated regulations. If a nonlawyer CPA were to perform this analysis independently and file the BOI reports without consulting a legal professional, they could be deemed to be engaging in UPL.
Accordingly, nonlawyer professional service providers should engage a qualified legal professional to assist with the more complex nuances of the CTA and BOI reporting.
Key Takeaways
Nonlawyer professional service providers must be wary of inadvertently engaging in UPL. As the complexity of an engagement increases, it would be wise for these professionals to consult with an attorney to ensure they do not expose themselves and their clients to unnecessary risk by performing analyses and making determinations that require the requisite legal knowledge of a licensed attorney.
The consequences for nonlawyer professionals engaging in UPL extend not only to civil and criminal penalties but also damage to their professional reputations. Clients depend on their trusted advisors to guide them through complex problems, whether they be financial, legal, or a multitude of issues.
How FileForms Can Help
FileForms team of CPAs and attorneys mitigates professional service providers’ risk of engaging in UPL by employing tax and legal industry experts with the requisite knowledge to properly handle their Clients’ BOI reporting needs.
Whether these providers want to handle their clients’ BOI reports in-house or outsource their BOI function to FileForms team, solutions are available for every instance. For more information, please visit our website or contact us.
[1] The ABA Model Rules do not attempt to define the practice of law. MODEL RULES OF PROF’L CONDUCT R. 5.5 cmt. (2011) (“The definition of the practice of law is established by law and varies from one jurisdiction to another.”).
[2] See Gary G. Sackett, An Analytic Approach to Defining the “Practice of Law” Utah’s New Definition, UTAH B.J., Jan. 20, 2006, http://webster.utahbar.orgIbarjoumal/2006/01/ananalyticapproachtodefini.html (explaining that most legislatures, courts, bar associations, and committees’ attempts to define the practice of law are “circular because they define a concept in terms of the very term ‘law’ or its derivatives such as ‘lawyer’ and ‘legal.’).
[3] Melone, supra note 10, at 53; see also Ronald A. Landen, Comment, The Prospects of the Accountant-Lawyer Multidisciplinary Partnership in English-Speaking Countries, 13 EMORY INT’L L. REV. 763, 774-90 (1999) (providing descriptions of how various U.S. and international jurisdictions define the practice of law.
Beneficial Ownership Information Reporting
Frequently Asked Questions
FinCEN has prepared the following Frequently Asked Questions (FAQs) in response to inquiries received relating to the Beneficial Ownership Information Reporting Rule.
These FAQs are explanatory only and do not supplement or modify any obligations imposed by statute or regulation. Please refer to the Beneficial Ownership Information Reporting Rule, available at www.fincen.gov/boi, for details on specific provisions. FinCEN expects to publish additional guidance in the future. Questions may be submitted on FinCEN’s Contact web page.
A. 2. Why do companies have to report beneficial ownership information to the U.S. Department of the Treasury?
In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
A. 3. Under the Corporate Transparency Act, who can access beneficial ownership information?
FinCEN will permit Federal, State, local, and Tribal officials, as well as certain foreign officials who submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. Financial institutions will have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the financial institutions.
FinCEN published the rule that will govern access to and protection of beneficial ownership information on December 22, 2023. Beneficial ownership information reported to FinCEN will be stored in a secure, non-public database using rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level. FinCEN will work closely with those authorized to access beneficial ownership information to ensure that they understand their roles and responsibilities in using the reported information only for authorized purposes and handling in a way that protects its security and confidentiality.
A. 4. How will companies become aware of the BOI reporting requirements?
FinCEN is engaged in a robust outreach and education campaign to raise awareness of and help reporting companies understand the new reporting requirements. That campaign involves virtual and in-person outreach events and comprehensive guidance in a variety of formats and languages, including multimedia content and the Small Entity Compliance Guide, as well as new channels of communication, including social media platforms. FinCEN is also engaging with governmental offices at the federal and state levels, small business and trade associations, and interest groups.
FinCEN will continue to provide guidance, information, and updates related to the BOI reporting requirements on its BOI webpage, www.fincen.gov/boi. Subscribe here to receive updates via email from FinCEN about BOI reporting obligations.
B. 1. Should my company report beneficial ownership information now?
FinCEN launched the BOI E-Filing website for reporting beneficial ownership information (https://boiefiling.fincen.gov) on January 1, 2024.
A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.
B. 2. When do I need to report my company’s beneficial ownership information to FinCEN?
A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
B. 3. When will FinCEN accept beneficial ownership information reports?
FinCEN will begin accepting beneficial ownership information reports on January 1, 2024. Beneficial ownership information reports will not be accepted before then.
B. 5. How will I report my company’s beneficial ownership information?
If you are required to report your company’s beneficial ownership information to FinCEN, you will do so electronically through a secure filing system available via FinCEN’s BOI E-Filing website (https://boiefiling.fincen.gov).
B. 7. Is a reporting company required to use an attorney or a certified public accountant (CPA) to submit beneficial ownership information to FinCEN?
No. FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers such as lawyers or accountants.
B. 8. Who can file a BOI report on behalf of a reporting company, and what information will be collected on filers?
Anyone whom the reporting company authorizes to act on its behalf—such as an employee, owner, or third-party service provider—may file a BOI report on the reporting company’s behalf. When submitting the BOI report, individual filers should be prepared to provide basic contact information about themselves, including their name and email address or phone number.
C. 1. What companies will be required to report beneficial ownership information to FinCEN?
Companies required to report are called reporting companies. There are two types of reporting companies:
Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
There are 23 types of entities that are exempt from the reporting requirements (see Question C.2). Carefully review the qualifying criteria before concluding that your company is exempt.
FinCEN’s Small Entity Compliance Guide for beneficial ownership information reporting includes the following flowchart to help identify if a company is a reporting company (see Chapter 1.1, “Is my company a “reporting company”?”).
C. 2. Are some companies exempt from the reporting requirement?
Yes, 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.
The following table summarizes the 23 exemptions:
Exemption No.
Exemption Short Title
1
Securities reporting issuer
2
Governmental authority
3
Bank
4
Credit union
5
Depository institution holding company
6
Money services business
7
Broker or dealer in securities
8
Securities exchange or clearing agency
9
Other Exchange Act registered entity
10
Investment company or investment adviser
11
Venture capital fund adviser
12
Insurance company
13
State-licensed insurance producer
14
Commodity Exchange Act registered entity
15
Accounting firm
16
Public utility
17
Financial market utility
18
Pooled investment vehicle
19
Tax-exempt entity
20
Entity assisting a tax-exempt entity
21
Large operating company
22
Subsidiary of certain exempt entities
23
Inactive entity
FinCEN’s Small Entity Compliance Guide includes this table and checklists for each of the 23 exemptions that may help determine whether a company meets an exemption (see Chapter 1.2, “Is my company exempt from the reporting requirements?”). Companies should carefully review the qualifying criteria before concluding that they are exempt. Please see additional FAQs about reporting company exemptions in “L. Reporting Company Exemptions” below.
C. 3. Are certain corporate entities, such as statutory trusts, business trusts, or foundations, reporting companies?
It depends. A domestic entity such as a statutory trust, business trust, or foundation is a reporting company only if it was created by the filing of a document with a secretary of state or similar office. Likewise, a foreign entity is a reporting company only if it filed a document with a secretary of state or a similar office to register to do business in the United States.
State laws vary on whether certain entity types, such as trusts, require the filing of a document with the secretary of state or similar office to be created or registered.
If a trust is created in a U.S. jurisdiction that requires such filing, then it is a reporting company, unless an exemption applies.
Similarly, not all states require foreign entities to register by filing a document with a secretary of state or a similar office to do business in the state.
However, if a foreign entity has to file a document with a secretary of state or a similar office to register to do business in a state, and does so, it is a reporting company, unless an exemption applies.
Entities should also consider if any exemptions to the reporting requirements apply to them. For example, a foundation may not be required to report beneficial ownership information to FinCEN if the foundation qualifies for the tax-exempt entity exemption.
Chapter 1 of FinCEN’s Small Entity Compliance Guide (“Does my company have to report its beneficial owners?”) may assist companies in identifying whether they need to report.
C. 4. Is a trust considered a reporting company if it registers with a court of law for the purpose of establishing the court’s jurisdiction over any disputes involving the trust?
No. The registration of a trust with a court of law merely to establish the court’s jurisdiction over any disputes involving the trust does not make the trust a reporting company.
C. 5. Does the activity or revenue of a company determine whether it is a reporting company?
Sometimes. A reporting company is (1) any corporation, limited liability company, or other similar entity that was created in the United States by the filing of a document with a secretary of state or similar office (in which case it is a domestic reporting company), or any legal entity that has been registered to do business in the United States by the filing of a document with a secretary of state or similar office (in which case it is a foreign reporting company), that (2) does not qualify for any of the exemptions provided under the Corporate Transparency Act. An entity’s activities and revenue, along with other factors in some cases, can qualify it for one of those exemptions. For example, there is an exemption for certain inactive entities, and another for any company that reported more than $5 million in gross receipts or sales in the previous year and satisfies other exemption criteria. Neither engaging solely in passive activities like holding rental properties, for example, nor being unprofitable necessarily exempts an entity from the BOI reporting requirements.
FinCEN’s Small Entity Compliance Guide provides additional information concerning exemptions in Chapter 1.2, “Is my company exempt from the reporting requirements?”
C. 6. Is a sole proprietorship a reporting company?
No, unless a sole proprietorship was created (or, if a foreign sole proprietorship, registered to do business) in the United States by filing a document with a secretary of state or similar office. An entity is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing such a document. Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.
C. 7. Can a company created or registered in a U.S. territory be considered a reporting company?
Yes. In addition to companies in the 50 states and the District of Columbia, a company that is created or registered to do business by the filing of a document with a U.S. territory’s secretary of state or similar office, and that does not qualify for any exemptions to the reporting requirements, is required to report beneficial ownership information to FinCEN. U.S. territories are the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the U.S. Virgin Islands.
D. 1. Who is a beneficial owner of a reporting company?
A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control (see Question D.2) over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests (see Question D.4).
FinCEN’s Small Entity Compliance Guide provides checklists and examples that may assist in identifying beneficial owners (see Chapter 2.3 “What steps can I take to identify my company’s beneficial owners?”).
An individual can exercise substantial control over a reporting company in four different ways. If the individual falls into any of the categories below, the individual is exercising substantial control:
The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).
The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
The individual is an important decision-maker for the reporting company. See Question D.3 for more information.
The individual has any other form of substantial control over the reporting company as explained further in FinCEN’s Small Entity Compliance Guide (see Chapter 2.1, “What is substantial control?”).
D. 3. One of the indicators of substantial control is that the individual is an important decision-maker. What are important decisions?
Important decisions include decisions about a reporting company’s business, finances, and structure. An individual that directs, determines, or has substantial influence over these important decisions exercises substantial control over a reporting company. Chapter 2.1, “What is substantial control?” of FinCEN’s Small Entity Compliance Guide provides the following information:
An ownership interest is generally an arrangement that establishes ownership rights in the reporting company. Examples of ownership interests include shares of equity, stock, voting rights, or any other mechanism used to establish ownership.
Chapter 2.2, “What is ownership interest?” of FinCEN’s Small Entity Compliance Guide discusses ownership interests and sets out steps to assist in determining the percentage of ownership interests held by an individual.
D. 5. Who qualifies for an exception from the beneficial owner definition?
There are five instances in which an individual who would otherwise be a beneficial owner of a reporting company qualifies for an exception. In those cases, the reporting company does not have to report that individual as a beneficial owner to FinCEN.
FinCEN’s Small Entity Compliance Guide includes a checklist to help determine whether any exceptions apply to individuals who might otherwise qualify as beneficial owners (see Chapter 2.4. “Who qualifies for an exception from the beneficial owner definition?”).
D. 6. Is my accountant or lawyer considered a beneficial owner?
Accountants and lawyers generally do not qualify as beneficial owners, but that may depend on the work being performed.
Accountants and lawyers who provide general accounting or legal services are not considered beneficial owners because ordinary, arms-length advisory or other third-party professional services to a reporting company are not considered to be “substantial control” (see Question D.2). In addition, a lawyer or accountant who is designated as an agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.
However, an individual who holds the position of general counsel in a reporting company is a “senior officer” of that company and is therefore a beneficial owner. FinCEN’s Small Entity Compliance Guide includes a checklist to help determine whether an individual qualifies for an exception to the beneficial owner definition (see Chapter 2.4, “Who qualifies for an exception from the beneficial owner definition?”).
D. 7. What information should a reporting company report about a beneficial owner who holds their ownership interests in the reporting company through multiple exempt entities?
If a beneficial owner owns or controls their ownership interests in a reporting company exclusively through multiple exempt entities, then the names of all of those exempt entities may be reported to FinCEN instead of the individual beneficial owner’s information.
Note that this special rule does not apply when an individual owns or controls ownership interests in a reporting company through both exempt and non-exempt entities. In that case, the reporting company must report the individual as a beneficial owner (if no exception applies), but the exempt companies do not need to be listed.
FinCEN’s Small Entity Compliance Guide includes more information about this special reporting rule in Chapter 4.2, “What do I report if a special reporting rule applies to my company?”
D. 8. Is an unaffiliated company that provides a service to the reporting company by managing its day-to-day operations, but does not make decisions on important matters, a beneficial owner of the reporting company?
The unaffiliated company itself cannot be a beneficial owner of the reporting company because a beneficial owner must be an individual. Any individuals that exercise substantial control over the reporting company through the unaffiliated company must be reported as beneficial owners of the reporting company. However, individuals who do not direct, determine, or have substantial influence over important decisions made by the reporting company, and do not otherwise exercise substantial control, may not be beneficial owners of the reporting company.
Please see Chapter 2.1 of FinCEN’s Small Entity Compliance Guide, “What is substantial control?” for additional information on how to determine whether an individual has substantial control over a reporting company.
D. 9. Is a member of a reporting company’s board of directors always a beneficial owner of the reporting company?
No. A beneficial owner of a company is any individual who, directly or indirectly, exercises substantial control over a reporting company, or who owns or controls at least 25 percent of the ownership interests of a reporting company.
Whether a particular director meets any of these criteria is a question that the reporting company must consider on a director-by-director basis.
FinCEN’s Small Entity Compliance Guide includes additional information on how to determine if an individual qualifies as a beneficial owner in Chapter 2, “Who is a beneficial owner of my company?”. This chapter includes separate sections with more information about substantial control and ownership interest: Chapter 2.1 “What is substantial control?” and Chapter 2.2 “What is ownership interest?”
D. 10. Is a reporting company’s designated “partnership representative” or “tax matters partner” a beneficial owner?
It depends. A reporting company’s “partnership representative,” as defined in 26 U.S.C. 6223, or “tax matters partner,” as the term was previously defined in now-repealed 26 U.S.C. 6231(a)(7), is not automatically a beneficial owner of the reporting company. However, such an individual may qualify as a beneficial owner of the reporting company if the individual exercises substantial control over the reporting company, or owns or controls at least 25 percent of the company’s ownership interests.
Chapter 2 of FinCEN’s Small Entity Compliance Guide (“Who is a beneficial owner of my company?”) has additional information on how to determine if an individual qualifies as a beneficial owner of a reporting company.
Note that a “partnership representative” or “tax matters partner” serving in the role of a designated agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.
FinCEN’s Small Entity Compliance Guide includes additional information on such exemptions in Chapter 2.4, “Who qualifies for an exception from the beneficial owner definition?”
D. 11. What should a reporting company report if its ownership is in dispute?
If ownership of a reporting company is the subject of active litigation and an initial BOI report has not been filed, a person authorized by the company to file its beneficial ownership information should comply with the requirements by reporting:
all individuals who exercise substantial control over the company, and
all individuals who own or control, or have a claim to ownership or control of, at least 25 percent ownership interests in the company.
If an initial BOI report has been filed, and if the resolution of the litigation leads to the reporting company having different beneficial owners from those reported (for example, because some individuals’ claims to ownership or control have been rejected), the reporting company must file an updated BOI report within 30 calendar days of resolution of the litigation.
D. 12. Who does a reporting company report as a beneficial owner if a corporate entity owns or controls 25 percent or more of the ownership interests of the reporting company?
Ordinarily, such a reporting company reports the individuals who indirectly either (1) exercise substantial control over the reporting company or (2) own or control at least 25 percent of the ownership interests in the reporting company through the corporate entity. It should not report the corporate entity that acts as an intermediate for the individuals.
For an example of how to calculate the percentage of ownership interests an individual owns or controls in a reporting company if the individual’s ownership interests are held through an intermediate entity, please review example 4 in Chapter 2.3, “What steps can I take to identify my company’s beneficial owners?” of FinCEN’s Small Entity Compliance Guide.
Two special rules create exceptions to this general rule in very specific circumstances:
A reporting company may report the name(s) of an exempt entity or entities in lieu of an individual beneficial owner who owns or controls ownership interests in the reporting company entirely through ownership interests in the exempt entity or entities; or
If the beneficial owners of the reporting company and the intermediate company are the same individuals, a reporting company may report the FinCEN identifier and full legal name of an intermediate company through which an individual is a beneficial owner of the reporting company.
FinCEN’s Small Entity Compliance Guide includes additional information about these special reporting rules (see Chapter 4.2, “What do I report if a special reporting rule applies to my company?”).
E. 1. Who is a company applicant of a reporting company?
Only reporting companies created or registered on or after January 1, 2024, will need to report their company applicants.
A company that must report its company applicants will have only up to two individuals who could qualify as company applicants:
The individual who directly files the document that creates or registers the company; and
If more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing.
The following flowchart can help identify the company applicant.
In addition, Chapter 3.2, “Who is a company applicant of my company?” of FinCEN’s Small Entity Compliance Guide includes additional information to help identify company applicants.
E. 2. Which reporting companies are required to report company applicants?
Not all reporting companies have to report their company applicants to FinCEN.
A reporting company must report its company applicants only if it is either a:
Domestic reporting company created in the United States on or after January 1, 2024; or
Foreign reporting company first registered to do business in the United States on or after January 1, 2024.
A reporting company does not have to report its company applicants if it is either a:
Domestic reporting company created in the United States before January 1, 2024; or
Foreign reporting company first registered to do business in the United States before January 1, 2024.
Below is summary of the company applicant reporting requirement. Chapter 3.1, “Is my company required to report its company applicants?” of FinCEN’s Small Entity Compliance Guide includes additional information.
E. 3. Is my accountant or lawyer considered a company applicant?
An accountant or lawyer could be a company applicant, depending on their role in filing the document that creates or registers a reporting company. In many cases, company applicants may work for a business formation service or law firm.
An accountant or lawyer may be a company applicant if they directly filed the document that created or registered the reporting company. If more than one person is involved in the filing of the creation or registration document, an accountant or lawyer may be a company applicant if they are primarily responsible for directing or controlling the filing.
For example, an attorney at a law firm that offers business formation services may be primarily responsible for overseeing preparation and filing of a reporting company’s incorporation documents. A paralegal at the law firm may directly file the incorporation documents at the attorney’s request. Under those circumstances, the attorney and the paralegal are both company applicants for the reporting company.
E. 4. Can a company applicant be removed from a BOI report if the company applicant no longer has a relationship with the reporting company?
No. A company applicant may not be removed from a BOI report even if the company applicant no longer has a relationship with the reporting company. A reporting company created on or after January 1, 2024, is required to report company applicant information in its initial BOI report, but is not required to file an updated BOI report if information about a company applicant changes.
E. 5. The company applicants of a reporting company include the individual “primarily responsible for directing the filing of the creation or registration document.” What makes an individual “primarily responsible” for directing such a filing?
At most, two individuals need to be reported as company applicants:
the person who directly files the document with a secretary of state or similar office, and
if more than one person is involved in the filing of the document, the person who is primarily responsible for directing or controlling the filing.
For the purposes of determining who is a company applicant, it is not relevant who signs the creation or registration document, for example, as an incorporator. To determine who is primarily responsible for directing or controlling the filing of the document, consider who is responsible for making the decisions about the filing of the document, such as how the filing is managed, what content the document includes, and when and where the filing occurs. The following three scenarios provide examples.
Scenario 1: Consider an attorney who completes a company creation document using information provided by a client, and then sends the document to a corporate service provider for filing with a secretary of state. In this example:
The attorney is the company applicant who is primarily responsible for directing or controlling the filing because they prepared the creation document and directed the corporate service provider to file it.
The individual at the corporate service provider is the company applicant who directly filed the document with the secretary of state.
Scenario 2: If the attorney instructs a paralegal to complete the preparation of the creation document, rather than doing so themself, before directing the corporate service provider to file the document, the outcome remains the same: the attorney and the individual at the corporate service provider who files the document are company applicants. The paralegal is not a company applicant because the attorney played a greater role than the paralegal in making substantive decisions about the filing of the document.
Scenario 3: If the client who initiated the company creation directly asks the corporate service provider to file the document to create the company, then the client is primarily responsible for directing or controlling the filing, and the client should be reported as a company applicant, along with the individual at the corporate service provider who files the document.
E. 6. Is a third-party courier or delivery service employee who only delivers documents that create or register a reporting company a company applicant?
No. A third-party courier or delivery service employee who only delivers documents to a secretary of state or similar office is not a company applicant provided they meet one condition: the third-party courier, the delivery service employee, and any delivery service that employs them does not play any other role in the creation or registration of the reporting company.
When a third-party courier or delivery service employee is used solely for delivery, the individual (e.g., at a business formation service or law firm) who requested the third-party courier or delivery service to deliver the document will typically be a company applicant.
Under FinCEN’s regulations, an individual who “directly files the document” that creates or registers the reporting company is a company applicant. Third-party couriers or delivery service employees who deliver such documents facilitate the documents’ filing, but FinCEN does not consider them to be the filers of the documents given their only connection to the creation or registration of the reporting company is couriering the documents.
Rather, when a third-party courier or delivery service is used by a firm, the company applicant who “directly files” the creation or registration document is the individual at the firm who requests that the third-party courier or delivery service deliver the documents.
For example, an attorney at a law firm may be involved in the preparation of incorporation documents. The attorney directs a paralegal to file the documents. The paralegal may then request a third-party delivery service to deliver the incorporation documents to the secretary of state’s office. The paralegal is the company applicant who directly files the documents, even though the third-party delivery service delivered the documents on the paralegal’s behalf. The attorney at the law firm who was involved in the preparation of the incorporation documents and who directed the paralegal to file the documents will also be a company applicant because the attorney was primarily responsible for directing or controlling the filing of the documents.
In contrast, if a courier is employed by a business formation service, law firm, or other entity that plays a role in the creation or registration of the reporting company, such as drafting the relevant documents or compiling information to be submitted as part of the documents delivered, the conclusion is different. FinCEN considers such a courier to have directly filed the documents—and thus to be a company applicant—given the courier’s greater connection (via the courier’s employer) to the creation or registration of the company.
For example, a mailroom employee at a law firm may physically deliver the document that creates a reporting company at the direction of an attorney at the law firm who is primarily responsible for decisions related to the filing. Both individuals are company applicants.
E. 7. If an individual used an automated incorporation service, such as through a website or online platform, to file the creation or registration document for a reporting company, who is the company applicant?
If a business formation service only provides software, online tools, or generally applicable written guidance that are used to file a creation or registration document for a reporting company, and employees of the business service are not directly involved in the filing of the document, the employees of such services are not company applicants. For example, an individual may prepare and self-file documents to create the individual’s own reporting company through an automated incorporation service. In this case, this reporting company reports only that individual as a company applicant.
F. 1. Will a reporting company need to report any other information in addition to information about its beneficial owners?
Yes. The information that needs to be reported, however, depends on when the company was created or registered.
If a reporting company is created or registered on or after January 1, 2024, the reporting company will need to report information about itself, its beneficial owners, and its company applicants.
If a reporting company was created or registered before January 1, 2024, the reporting company only needs to provide information about itself and its beneficial owners. The reporting company does not need to provide information about its company applicants.
F. 2. What information will a reporting company have to report about itself?
A reporting company will have to report:
Its legal name;
Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters);
Its jurisdiction of formation or registration; and
Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).
A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.
FinCEN’s Small Entity Compliance Guide includes a checklist to help identify the information required to be reported (see Chapter 4.1, “What information should I collect about my company, its beneficial owners, and its company applicants?”).
F. 3. What information will a reporting company have to report about its beneficial owners?
For each individual who is a beneficial owner, a reporting company will have to provide:
The individual’s name;
Date of birth;
Residential address; and
An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document (for examples of acceptable identification, see Question F.5).
The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.
FinCEN’s Small Entity Compliance Guide includes a checklist to help identify the information required to be reported (see Chapter 4.1, “What information should I collect about my company, its beneficial owners, and its company applicants?”).
F. 4. What information will a reporting company have to report about its company applicants?
For each individual who is a company applicant, a reporting company will have to provide:
The individual’s name;
Date of birth;
Address; and
An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document (for examples of acceptable identification, see Question F.5).
The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.
If the company applicant works in corporate formation—for example, as an attorney or corporate formation agent—then the reporting company must report the company applicant’s business address. Otherwise, the reporting company must report the company applicant’s residential address.
FinCEN’s Small Entity Compliance Guide includes a checklist to help identify the information required to be reported (see Chapter 4.1, “What information should I collect about my company, its beneficial owners, and its company applicants?”).
F. 5. What are some acceptable forms of identification that will meet the reporting requirement?
The only acceptable forms of identification are:
A non-expired U.S. driver’s license (including any driver’s licenses issued by a commonwealth, territory, or possession of the United States);
A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;
A non-expired passport issued by the U.S. government; or
A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).
F. 6. Is there a requirement to annually report beneficial ownership information?
No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and updated or corrected BOI reports as needed.
FinCEN’s Small Entity Compliance Guide includes more information about when to file initial BOI reports in Chapter 5.1, “When should my company file its initial BOI report?” and when to file updated and corrected BOI reports in Chapter 6, “What if there are changes to or inaccuracies in reported information?”
F. 7. Does a reporting company have to report information about its parent or subsidiary companies?
No, though if a special reporting rule applies, the reporting company may report a parent company’s name instead of beneficial ownership information. A reporting company usually must report information about itself, its beneficial owners, and, for reporting companies created or registered on or after January 1, 2024, its company applicants. However, under a special reporting rule, a reporting company may report a parent company’s name in lieu of information about its beneficial owners if its beneficial owners only hold their ownership interest in the reporting company through the parent company and the parent company is an exempt entity.
Chapter 4 of FinCEN’s Small Entity Compliance Guide (“What specific information does my company need to report?”) provides additional information on what must be reported to FinCEN. Chapter 4.2 (“What do I report if a special reporting rule applies to my company?”) specifically provides details on what information must be reported pursuant to special reporting rules.
F. 8. Can a reporting company report a P.O. box as its current address?
No. The reporting company address must be a U.S. street address and cannot be a P.O. box.
FinCEN’s Small Entity Compliance Guide includes additional information on what must be reported in Chapter 4, “What specific information does my company need to report?”
F. 9. Have I met FinCEN’s BOI reporting obligation if I filed a form or report that provides beneficial ownership information to a state office, a financial institution, or the IRS?
No. Reporting companies must report beneficial ownership information directly to FinCEN. Congress enacted a law, the Corporate Transparency Act, that requires the reporting of beneficial ownership information directly to FinCEN. State or local governments, financial institutions, and other federal agencies, such as the IRS, may separately require entities to report certain beneficial ownership information. However, by law, those requirements are not a substitute for reporting beneficial ownership information to FinCEN.
F. 10. If a beneficial owner or company applicant’s acceptable identification document does not include a photograph for religious reasons, will FinCEN accept the identification document without the photograph?
Yes. If a beneficial owner or company applicant’s identification document does not include a photograph for religious reasons, the reporting company may nonetheless submit an image of that identification document when submitting its report, as long as the identification document is one of the types of identification accepted by FinCEN, such as a non-expired State-issued identification document. Please see Question F.5 for a list of acceptable identification documents.
F. 11. What residential address should be reported if a reporting company is required to a report an individual’s residential address, but that individual does not have a permanent residential residence?
The residential address that is current at the time of filing should be reported to FinCEN. An updated report should be submitted within 30 calendar days if the address, or any other information previously reported, changes.
FinCEN’s Small Entity Compliance Guide includes additional information on what information must be reported in Chapter 4, “What specific information does my company need to report?” and what to do when previously reported information needs to be updated in Chapter 6.1 “What should I do if previously reported information changes?”
G. 1. When do I have to file an initial beneficial ownership information report with FinCEN?
If your company existed before January 1, 2024, it must file its initial beneficial ownership information report by January 1, 2025.
If your company was created or registered on or after January 1, 2024, and before January 1, 2025, then it must file its initial beneficial ownership information report within 90 calendar days after receiving actual or public notice that its creation or registration is effective. Specifically, this 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
If your company was created or registered on or after January 1, 2025, it must file its initial beneficial ownership information report within 30 calendar days after receiving actual or public notice that its creation or registration is effective. The following sets out the initial report timelines. .
Chapter 5.1 “When should my company file its initial BOI report?” of FinCEN’s Small Entity Compliance Guide has additional information about the reporting timelines.
G. 3. How can I obtain a Taxpayer Identification Number (TIN) for a new company quickly so that I can file an initial beneficial ownership information report on time?
The Internal Revenue Service (IRS) offers a free online application for an Employer Identification Number (EIN), a type of TIN, which is provided immediately upon submission of the application. For more information on TINs, see “Taxpayer Identification Numbers (TIN)” at IRS.gov (https://www.irs.gov/individuals/international-taxpayers/taxpayer-identification-numbers-tin). For more information on Employer Identification Numbers and to access the EIN online application, see “Apply for an Employer Identification Number (EIN) Online” at IRS.gov (https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online).
A paper filing is required if a foreign person that does not have an Individual Taxpayer Identification Number (ITIN) applies for an EIN. According to the IRS, receiving an EIN through this process could take six to eight weeks. If you are a foreign person that may need to obtain an EIN for a reporting company, we recommend applying early for an ITIN. Foreign reporting companies that are not subject to U.S. corporate income tax may report a foreign tax identification number and the name of the relevant jurisdiction instead of an EIN or TIN.
G. 4. Should an initial BOI report include historical beneficial owners of a reporting company, or only beneficial owners as of the time of filing?
An initial BOI report should only include the beneficial owners as of the time of the filing. Reporting companies should notify FinCEN of changes to beneficial owners and related BOI through updated reports.
FinCEN’s Small Entity Compliance Guide includes more information about when to file updated or corrected BOI reports in Chapter 6, “What if there are changes to or inaccuracies in reported information?”
G. 5. How does a company created or registered after January 1, 2024, determine its date of creation or registration?
The date of creation or registration for a reporting company is the earlier of the date on which: (1) the reporting company receives actual notice that its creation (or registration) has become effective; or (2) a secretary of state or similar office first provides public notice, such as through a publicly accessible registry, that the domestic reporting company has been created or the foreign reporting company has been registered.
FinCEN recognizes that there are varying state filing practices. In certain states, automated systems provide notice of creation or registration to newly created or registered companies. In other states, no actual notice of creation or registration is provided, and newly created companies receive notice through the public posting of state records. FinCEN believes that individuals who create or register reporting companies will likely stay apprised of creation or registration notices or publications, given those individuals’ interest in establishing an operating business or engaging in the activity for which the reporting company is created.
H. 1. What should I do if previously reported information changes?
If there is any change to the required information about your company or its beneficial owners in a beneficial ownership information report that your company filed, your company must file an updated report no later than 30 days after the date of the change.
A reporting company is not required to file an updated report for any changes to previously reported information about a company applicant.
The following infographic sets out updated reports timelines.
Chapter 6.1, “What should I do if previously reported information changes?” of FinCEN’s Small Entity Compliance Guide provides additional information.
H. 2. What are some likely triggers for needing to update a beneficial ownership information report?
The following are some examples of the changes that would require an updated beneficial ownership information report:
Any change to the information reported for the reporting company, such as registering a new business name.
A change in beneficial owners, such as a new CEO, or a sale that changes who meets the ownership interest threshold of 25 percent (see Question D.4 for more information about ownership interests).
Any change to a beneficial owner’s name, address, or unique identifying number previously provided to FinCEN. If a beneficial owner obtained a new driver’s license or other identifying document that includes a changed name, address, or identifying number, the reporting company also would have to file an updated beneficial ownership information report with FinCEN, including an image of the new identifying document.
FinCEN’s Small Entity Compliance Guide provides additional guidance on triggers requiring an updated beneficial ownership information report (see Chapter 6.1 “What should I do if previously reported information changes?”).
H. 3. Is an updated BOI report required when the type of ownership interest a beneficial owner has in a reporting company changes?
No. A change to the type of ownership interest a beneficial owner has in a reporting company—for example, a conversion of preferred shares to common stock—does not require the reporting company to file an updated BOI report because FinCEN does not require companies to report the type of interest. Updated BOI reports are required when information reported to FinCEN about the reporting company or its beneficial owners changes.
FinCEN’s Small Entity Compliance Guide includes additional information on when and how reporting companies must update information in Chapter 6, “What if there are changes to or inaccuracies in reported information?”
H. 4. If a reporting company needs to update one piece of information on a BOI report, such as its legal name, does the reporting company have to fill out an entire new BOI report?
Updated BOI reports will require all fields to be submitted, including the updated pieces of information. For example, if a reporting company changes its legal name, the reporting company will need to file an updated BOI report to include the new legal name and the previously reported, unchanged information about the company, its beneficial owners, and, if required, its company applicants.
A reporting company that filed its prior BOI report using the fillable PDF version may update its saved copy and resubmit to FinCEN. If a reporting company used FinCEN’s web-based application to submit the previous BOI report, it will need to submit a new report in its entirety by either accessing FinCEN’s web-based application to complete and file the BOI report, or by using the PDF option to complete the BOI report and upload to the BOI e-Filing application.
H. 5. Can a filer submit a late updated BOI report?
An updated BOI report can be submitted to FinCEN at any time. However, the reporting company is responsible for ensuring that updates are filed within 30 days of a change occurring. If a reporting company has engaged a third-party service provider to file BOI reports and updates on its behalf, then it should communicate any changes to its beneficial ownership information to the third-party service provider with enough time to meet the 30-day deadline.
H. 6. If a reporting company last filed a “newly exempt entity” BOI report but subsequently loses its exempt status, what should it do?
A reporting company should file an updated BOI report with FinCEN with the company’s current beneficial ownership information when it determines it no longer qualifies for an exemption.
I. 1. What should I do if I learn of an inaccuracy in a report?
If a beneficial ownership information report is inaccurate, your company must correct it no later than 30 days after the date your company became aware of the inaccuracy or had reason to know of it. This includes any inaccuracy in the required information provided about your company, its beneficial owners, or its company applicants. The following infographic sets out the corrected report timelines.
Chapter 6.2, “What should I do if I learn of an inaccuracy in a report?” of FinCEN’s Small Entity Compliance Guide includes additional information about correcting inaccurate beneficial ownership information reports filed with FinCEN.
J. 1. What should a reporting company do if it becomes exempt after already filing a report?
If a reporting company filed a beneficial ownership information report but then becomes exempt from filing the report, the company should file an updated report indicating that it is no longer a reporting company. An updated BOI report for a newly exempt entity will only require that: (1) the entity identify itself; and (2) check a box noting its newly exempt status. Chapter 6.3, “What should my company do if it becomes exempt after already filing a report?” of FinCEN’s Small Entity Compliance Guide includes more information.
K. 1. What happens if a reporting company does not report beneficial ownership information to FinCEN or fails to update or correct the information within the required timeframe?
FinCEN is working hard to ensure that reporting companies are aware of their obligations to report, update, and correct beneficial ownership information. FinCEN understands this is a new requirement. If you correct a mistake or omission within 90 days of the deadline for the original report, you may avoid being penalized. However, you could face civil and criminal penalties if you disregard your beneficial ownership information reporting obligations.
FinCEN’s Small Entity Compliance Guide provides more information about enforcement of the requirement (see Chapter 1.3, “What happens if my company does not report BOI in the required timeframe?”).
K. 2. What penalties do individuals face for violating BOI reporting requirements?
As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
K. 3. Who can be held liable for violating BOI reporting requirements?
Both individuals and corporate entities can be held liable for willful violations. This can include not only an individual who actually files (or attempts to file) false information with FinCEN, but also anyone who willfully provides the filer with false information to report. Both individuals and corporate entities may also be liable for willfully failing to report complete or updated beneficial ownership information; in such circumstances, individuals can be held liable if they either cause the failure or are a senior officer at the company at the time of the failure.
i. Can an individual who files a report on behalf of a reporting company be held liable?
Yes. An individual who willfully files a false or fraudulent beneficial ownership information report on a company’s behalf may be subject to the same civil and criminal penalties as the reporting company and its senior officers.
ii. Can a beneficial owner or company applicant be held liable for refusing to provide required information to a reporting company?
Yes. As described above, an enforcement action can be brought against an individual who willfully causes a reporting company’s failure to submit complete or updated beneficial ownership information to FinCEN. This would include a beneficial owner or company applicant who willfully fails to provide required information to a reporting company.
K. 4. Is a reporting company responsible for ensuring the accuracy of the information that it reports to FinCEN, even if the reporting company obtains that information from another party?
Yes. It is the responsibility of the reporting company to identify its beneficial owners and company applicants, and to report those individuals to FinCEN. At the time the filing is made, each reporting company is required to certify that its report or application is true, correct, and complete. Accordingly, FinCEN expects that reporting companies will take care to verify the information they receive from their beneficial owners and company applicants before reporting it to FinCEN.
K. 5. What should a reporting company do if a beneficial owner or company applicant withholds information?
While FinCEN recognizes that much of the information required to be reported about beneficial owners and company applicants will be provided to reporting companies by those individuals, reporting companies are responsible for ensuring that they submit complete and accurate beneficial ownership information to FinCEN. Starting January 1, 2024, reporting companies will have a legal requirement to report beneficial ownership information to FinCEN.
Existing reporting companies should engage with their beneficial owners to advise them of this requirement, obtain required information, and revise or consider putting in place mechanisms to ensure that beneficial owners will keep reporting companies apprised of changes in reported information, if necessary. Beneficial owners and company applicants should also be aware that they may face penalties if they willfully cause a reporting company to fail to report complete or updated beneficial ownership information.
Persons considering creating or registering legal entities that will be reporting companies should take steps to ensure that they have access to the beneficial ownership information required to be reported to FinCEN, and that they have mechanisms in place to ensure that the reporting company is kept apprised of changes in that information.
L. 1. What are the criteria for the tax-exempt entity exemption from the beneficial ownership information reporting requirement?
An entity qualifies for the tax-exempt entity exemption if any of the following four criteria apply:
(1) The entity is an organization that is described in section 501(c) of the Internal Revenue Code of 1986 (Code) (determined without regard to section 508(a) of the Code) and exempt from tax under section 501(a) of the Code.
(2) The entity is an organization that is described in section 501(c) of the Code, and was exempt from tax under section 501(a) of the Code, but lost its tax-exempt status less than 180 days ago.
(3) The entity is a political organization, as defined in section 527(e)(1) of the Code, that is exempt from tax under section 527(a) of the Code.
(4) The entity is a trust described in paragraph (1) or (2) of section 4947(a) of the Code.
FinCEN’s Small Entity Compliance Guide includes checklists for this exemption (see exemption #19) and for the additional exemptions to the reporting requirements (see Chapter 1.2, “Is my company exempt from the reporting requirements?”).
L. 2. What are the criteria for the inactive entity exemption from the beneficial ownership information reporting requirement?
An entity qualifies for the inactive entity exemption if all six of the following criteria apply:
(1) The entity was in existence on or before January 1, 2020.
(2) The entity is not engaged in active business.
(3) The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially. “Foreign person” means a person who is not a United States person. A United States person is defined in section 7701(a)(30) of the Internal Revenue Code of 1986 as a citizen or resident of the United States, domestic partnership and corporation, and other estates and trusts.
(4) The entity has not experienced any change in ownership in the preceding twelve-month period.
(5) The entity has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding twelve-month period.
(6) The entity does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity.
FinCEN’s Small Entity Compliance Guide includes checklists for this exemption (see exemption #23) and for the additional exemptions to the reporting requirements (see Chapter 1.2, “Is my company exempt from the reporting requirements?”).
L. 3. What are the criteria for the subsidiary exemption from the beneficial ownership information reporting requirement?
Subsidiaries of certain types of entities that are exempt from the beneficial ownership information reporting requirements may also be exempt from the reporting requirement.
An entity qualifies for the subsidiary exemption if the following applies:
The entity’s ownership interests are controlled or wholly owned, directly or indirectly, by any of these types of exempt entities:
Securities reporting issuer;
Governmental authority;
Bank;
Credit union;
Depository institution holding company;
Broker or dealer in securities;
Securities exchange or clearing agency;
Other Exchange Act registered entity;
Investment company or investment adviser;
Venture capital fund adviser;
Insurance company;
State-licensed insurance producer;
Commodity Exchange Act registered entity;
Accounting firm;
Public utility;
Financial market utility;
Tax-exempt entity; or
Large operating company.
FinCEN’s Small Entity Compliance Guide includes definitions of the exempt entities listed above and a checklist for this exemption (see exemption #22). FinCEN’s Guide also includes checklists for the additional exemptions to the reporting requirements (see Chapter 1.2, “Is my company exempt from the reporting requirements?”).
L. 4. If I own a group of related companies, can I consolidate employees across those companies to meet the criteria of a large operating company exemption from the reporting company definition?
No. The large operating company exemption requires that the entity itself employ more than 20 full-time employees in the United States and does not permit consolidation of this employee count across multiple entities.
L. 5. How does a company report to FinCEN that the company is exempt?
A company does not need to report to FinCEN that it is exempt from the BOI reporting requirements if it has always been exempt.
If a company filed a BOI report and later qualifies for an exemption, that company should file an updated BOI report to indicate that it is newly exempt from the reporting requirements. Updated BOI reports are filed electronically though the secure filing system. An updated BOI report for a newly exempt entity will only require that the entity: (1) identify itself; and (2) check a box noting its newly exempt status.
L. 6. Does a subsidiary whose ownership interests are partially controlled by an exempt entity qualify for the subsidiary exemption?
No. If an exempt entity controls some but not all of the ownership interests of the subsidiary, the subsidiary does not qualify. To qualify, a subsidiary’s ownership interests must be fully, 100 percent owned or controlled by an exempt entity.
A subsidiary whose ownership interests are controlled or wholly owned, directly or indirectly, by certain exempt entities is exempt from the BOI reporting requirements. In this context, control of ownership interests means that the exempt entity entirely controls all of the ownership interests in the reporting company, in the same way that an exempt entity must wholly own all of a subsidiary’s ownership interests for the exemption to apply.
A “FinCEN identifier” is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN. An individual or reporting company may only receive one FinCEN identifier.
FinCEN’s Small Entity Compliance Guide includes additional information on FinCEN identifiers in Chapter 4.3, “What is a FinCEN identifier and how can I use it?”
When a beneficial owner or company applicant has obtained a FinCEN identifier, reporting companies may report the FinCEN identifier of that individual in the place of that individual’s otherwise required personal information on a beneficial ownership information report.
A reporting company may report another entity’s FinCEN identifier and full legal name in place of information about its beneficial owners when three conditions are met: (1) the other entity obtains a FinCEN identifier and provides it to the reporting company; (2) the beneficial owners hold interests in the reporting company through ownership interests in the other entity; and (3) the beneficial owners of the reporting company and the other entity are the exact same individuals.
Individuals may request a FinCEN identifier starting January 1, 2024, by completing an electronic web form at https://fincenid.fincen.gov. Individuals will need to provide their full legal name, date of birth, address, unique identifying number and issuing jurisdiction from an acceptable identification document, and an image of the identification document. After an individual submits this information, they will immediately receive a unique FinCEN identifier.
Reporting companies may request a FinCEN identifier by checking a box on the beneficial ownership information report upon submission. After the reporting company submits the report, the company will immediately receive a unique FinCEN identifier. If a reporting company wishes to request a FinCEN identifier after submitting its initial beneficial ownership report, it may submit an updated beneficial ownership information report requesting a FinCEN identifier, even if the company does not otherwise need to update its information.
M. 5. Do I need to update or correct the information I submitted to obtain a FinCEN identifier?
Yes. Individuals must update or correct information through the FinCEN identifier application that is also used to request a FinCEN identifier.
Individuals must report any change to the information they submitted to obtain a FinCEN identifier no later than 30 days after the date on which the change occurred.
If there is any inaccuracy in this information, an individual must correct the information no later than 30 days after the date the individual became aware of the inaccuracy or had reason to know of it.
Reporting companies with a FinCEN identifier must update or correct the company’s information by filing an updated or corrected beneficial ownership information report, as appropriate.
M. 6. Is there any way to deactivate an individual’s FinCEN identifier that is no longer in use so that the individual no longer has to update the information associated with it?
FinCEN is actively assessing options to allow individuals to deactivate a FinCEN identifier so that they do not need to update the underlying personal information on an ongoing basis. FinCEN will provide additional guidance on this functionality upon completion of that process.
M. 7. Who can request a FinCEN identifier on behalf of an individual?
Anyone authorized to act on behalf of an individual may request a FinCEN identifier on the individual’s behalf on or after January 1, 2024.
FinCEN identifiers for individuals are provided upon request after the requesting party has submitted the necessary information. Obtaining a FinCEN identifier for an individual requires the requesting party to create a Login.gov account, which is tied to the individual receiving the FinCEN identifier. Individuals who receive a FinCEN identifier should ensure their login credentials, including email address and related multi-factor information associated with their Login.gov account, are saved for future reference.
FinCEN’s Small Entity Compliance Guide includes additional information on the FinCEN identifier in Chapter 4.3 “What is a FinCEN identifier and how can I use it?”
N. 1. Can a third-party service provider assist reporting companies by submitting required information to FinCEN on their behalf?
Yes. Reporting companies may use third-party service providers to submit beneficial ownership information reports. Third-party service providers will have the ability to submit the reports via FinCEN’s BOI E-Filing website or an Application Programming Interface (API). To request the API technical specifications, use FinCEN’s contact form (https://www.fincen.gov/contact). Please do the following when submitting your inquiry: (1) select the topic associated with Beneficial Ownership (BO) / Corporate Transparency Act (CTA); (2) select the subject associated with API requests; (3) in the message body, indicate the nature of your API-related inquiry (e.g., “I would like to review the API technical specifications,” “I would like to request access to the API,” etc.).
N. 2. What type of evidence will a reporting company receive as confirmation that its BOI report has been successfully filed by a third-party service provider?
The BOI E-Filing application, available beginning January 1, 2024, provides acknowledgement of submission success or failure, and the submitter will be able to download a transcript of the BOI report. The reporting company will need to obtain this confirmation from the third-party service provider.
Author: Molly Day Published: 3/4/2024 https://www.nsba.biz/
BREAKING NEWS | FEDERAL JUDGE RULES IN FAVOR OF NSBA
The Corporate Transparency Act (CTA) was signed into law Dec. 2020 and is now in effect for many small businesses. This law will require ONLY certain businesses with fewer than 20 employees to disclose beneficial owners’ information to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
HUNTSVILLE, AL – NSBA applauds the ruling by the U.S. District Court of the Northern District of Alabama to grant summary judgment in NSBA’s challenge of the constitutionality of the Corporate Transparency Act (CTA). The ruling by Judge Liles Burke to strike down the CTA is a victory for law-abiding small-business owners everywhere who would have been forced to disclose their sensitive personal information to a government database.
“The CTA has from the very beginning been poor policy that unfairly targets America’s small businesses,” said Todd McCracken, President and CEO of NSBA. “This ruling justifies the concerns of millions of American businesses about how the CTA is not only a bureaucratic overreach, but a Constitutional infringement.”
The challenge to the CTA began in 2022 when the NSBA and Huntsville business owner Isaac Winkles first brought their case before the District Court. While the case was being considered in court, the U.S. Treasury Department’s implementation of the CTA has fallen short of expectations – millions of small-business owners still do not know about the requirements of the CTA The database is ripe for data security issues and confusion which could saddle small-business owners with hefty penalties or even jail time. “As the court noted, the ultimate goals of the CTA, countering money laundering and terrorism financing are laudable,” said John Neiman, counsel for the NSBA and Mr. Winkles. “But as the court also noted, the Constitution sets limits on what Congress can do to achieve even the most laudable of goals, and Congress violated those limits here. Congress can find a way to achieve these goals without exceeding the limits on its powers under the Constitution.” “The judge’s decision is an opportunity for Congress to go back to the drawing board and find a solution that will truly protect Americans from bad actors,” said McCracken. “The CTA simply will not accomplish the goal of stemming money-laundering – what it does is overstep the bounds of privacy, the law, and common sense at the expense of America’s small businesses.”
Celebrating more than 85 years in operation, NSBA is a staunchly nonpartisan organization advocating on behalf of America’s entrepreneurs. NSBA’s 65,000 members represent every state and every industry in the U.S. Please visit www.nsba.biz or follow us at @NSBAAdvocate.
The US District Court for the Northern District of Alabama declared the Corporate Transparency Act (“CTA”) Unconstitutional
On March 1, 2024, the US District Court for the Northern District of Alabama declared the Corporate Transparency Act (“CTA”) unconstitutional, and suspended its enforcement against the plaintiffs in that case. While most companies remain subject to its requirements for now, this decision may presage more broadly applicable relief through subsequent judicial or administrative action.
The CTA requires many entities conducting business in the United States to disclose beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”), a law enforcement arm of the US Department of Treasury. The court, in enjoining the CTA’s enforcement against the plaintiffs, found that the CTA exceeds constitutional limits on Congress’s power. In the wake of the decision, FinCEN announced that it intends to respect the court’s decision and will not enforce the CTA beneficial ownership requirements against the plaintiffs, but its silence as to other parties implies that everyone else must continue to comply.
In this Legal Update, we discuss the case, National Small Business Association, et al. v. Yellen, FinCEN’s response, and our predictions for what will come next.
Background
Enacted in 2021 as part of the National Defense Authorization Act (“NDAA”), the CTA requires certain legal entities to register with FinCEN and to disclose their ultimate, natural person beneficial owners.1 The CTA was enacted to “help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on entities doing business in the United States.”2 FinCEN’s final rule became effective on January 1, 2024.3
Six weeks after FinCEN released its final rule, Plaintiffs Isaac Winkles and the National Small Business Association (“NSBA”) brought suit in the Northern District of Alabama against the Treasury, as well as Treasury Secretary Janet Yellen and Acting Director of FinCEN Himamauli Das, both in their official capacities (collectively, the “Government”).4 Plaintiffs alleged that Congress lacked authority under Article I of the Constitution to enact the CTA’s mandatory disclosure requirements, and that those disclosure requirements run afoul of the First, Fourth, Fifth, Ninth, and Tenth amendments. The parties filed cross-motions for summary judgment.
The Court’s Opinion and Order
On March 1, 2024, the district court granted the Plaintiffs’ Motion for Summary Judgment, and issued a final judgment enjoining the Government from enforcing the CTA against the Plaintiffs.5 While the Government contended that the CTA was a permissible exercise of Congress’ authority pursuant to (1) Congress’s foreign affairs power; (2) Congress’s ability to regulate interstate and foreign commerce; and (3) Congress’s taxing power, the court rejected each argument in turn, emphasizing that that regulation targeted “local” activity. The court ultimately concluded that the regulation was an unconstitutional exercise of congressional power, declining to address Plaintiffs’ arguments that the CTA also ran afoul of the First, Fourth, and Fifth Amendments.6 However, the court limited its holding to the Plaintiffs in the case before it, permanently enjoining Defendants from enforcing the CTA against the Plaintiffs.
The court framed the question before it as “deceptively simple,” asking whether the Constitution gives Congress the power to regulate the millions of corporate entities incorporated under State law and their stakeholders “the moment they obtain a formal corporate status from a State[.]”7 After determining that both the individual and organizational Plaintiffs had standing, the court addressed the Government’s arguments that the CTA was a permissible exercise of Congressional power pursuant to (1) Congress’s foreign affairs and national security powers; (2) the Commerce Clause; or (3) Congress’s taxing power.
Standing
The court began its opinion by determining that both the individual and organizational Plaintiffs had standing to bring their claims in federal court. According to the court, “[t]he mandatory disclosure of personal information to FinCEN for law-enforcement purposes satisfies the injury requirement for Winkles’ First, Fourth, and Fifth Amendment claims.”8 By virtue of those claims, Winkles “is a party to an otherwise justiciable case or controversy,” and therefore, he also had standing to challenge the CTA as congressional overreach.9 Because Winkles had individual standing and is a member of the NSBA, the NBSA had organizational standing.
Foreign Affairs & National Security
The court then addressed whether the CTA was a constitutional exercise of Congress’s enumerated powers, considering each of the Government’s proposed bases in turn.
The court rejected the Government’s theory that the CTA is within Congress’s foreign affairs and national security powers because collecting beneficial ownership information is necessary to “‘protect vital US national security interests’; ‘better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity’; and ‘bring the United States into compliance with international anti-money laundering and countering the financing of terrorism standards.’”10 Emphasizing that “incorporation is an internal affair,” the court concluded that Congress’s foreign affairs powers could not “justify CTA’s regulation of ‘creatures of state law,’ which are ordinarily within the sovereign purview of the States.”11
The court also rejected the Government’s position that “regulation of purely internal affairs may be necessary and proper to effectuate Congress’s foreign affairs powers if foreign actors (or enough foreign actors) participate in those internal affairs to illicit ends.”12 The court reasoned that the Government’s reading would render the Necessary and Proper Clause practically limitless, and reemphasized that Congress’s foreign affairs powers “do not extend to purely internal affairs,” such as corporate formation.13
Commerce Clause
Next, the court rejected the Government’s argument that the CTA falls under Congress’s Commerce Clause authority. In doing so, the court distinguished between the activities regulated by the CTA—the act of incorporation—and economic activities that regulated entities may subsequently pursue.
The court first addressed the Government’s argument that the CTA validly regulates the channels and instrumentalities of commerce because reporting entities “frequently utilize the channels of commerce.”14 Explaining that the CTA “regulates most State entities, not just entities that move in commerce,” the court concluded that the CTA “doesn’t regulate the channels or instrumentalities or commerce or prevent their use for a specific purpose[.]”15 In other words, that some regulated entities may subsequently use the channels of instrumentalities of interstate commerce does not justify congressional regulation of the entire class of regulated entities. The court noted, however, that Congress could “easily” have written the CTA to pass constitutional muster by imposing the “disclosure requirements on State entities as soon as they engaged in commerce,” or by “prohibiting the use of interstate commerce to launder money” and other illicit activities.16
Turning next to the Government’s argument that the aggregate effect of legal entities’ withholding beneficial ownership information substantially affects commerce, the court likewise found an insufficient nexus between the regulated activities and commercial activity. The court again emphasized that the CTA “is not a facial regulation of commercial activity[.]”17 According to the court, while the subsequent activities engaged in by regulated entities may, in the aggregate, have an effect on interstate commerce, the object of the regulation itself is not an economic activity. At bottom, the court concluded that Congress lacked authority to enact the CTA because “[t]he proximity and degree of connection between the formation of an entity and its activities is too attenuated[.]”18
The court also rejected the Government’s argument that the CTA is necessary and proper, reasoning that FinCEN’s 2016 Customer Due Diligence (“CDD”) rule and the CTA “provide FinCEN with nearly identical information”—and the CDD “does so in a constitutionally acceptable manner.”19 Because of the similarities between the two pieces of legislation, the court did not credit the Government’s argument that “failure to regulate corporate entities upon formation would leave a gaping hole” in Congress’s fight against money laundering.20
Taxing Power & Necessary and Proper Clause
Finally, the court rejected the Government’s argument that Congress acted pursuant to the Necessary and Proper Clause in enacting the CTA because “the collection of beneficial ownership information is necessary and proper to ensure taxable income is appropriately reported[.]”21 While recognizing the relationship between the taxing power and the CTA’s disclosure requirements, the court found lacking a “sufficiently close relationship” between the two.22 According to the court, it would be “a substantial expansion of federal authority to permit Congress to bring its taxing power to bear just by collecting useful data and allowing tax-enforcement officials access to that data.”23 Given that “unfettered legislative power,” the court concluded that the CTA’s provisions were not a “proper” means to effectuate the policy goals embedded in the taxing power.24
After granting the Plaintiff’s Motion for Summary Judgment, the court entered a final declaratory judgment finding the CTA unconstitutional as exceeding constitutional limits on Congress’s power. The court permanently enjoined the enforcement of the CTA against the Plaintiffs.
Takeaways
While members of the NSBA and Winkels do not need to comply with the CTA’s requirements for now, there is no indication that FinCEN intends to let any other regulated party avoid compliance. Indeed, on March 4, 2024, FinCEN issued guidance in response to the court’s opinion, stating that “FinCEN will comply with the court’s order as long as it remains in effect.”25 Though FinCEN acknowledged that the plaintiffs in the case—the NSBA, members of the NSBA, Winkles and reporting companies for which he is the beneficial owner—will not be required to report beneficial ownership to FinCEN as a result of the Order, its silence as to other non-plaintiff reporting companies implies that FinCEN expects all others to comply. Additionally, FinCEN stated that it is interpreting the court’s decision to apply only to persons who joined the NSBA prior to the issuance of the decision, again implying that a person cannot now join the NSBA to avail themselves of the relief.
The broader effects of the court’s opinion remain uncertain. As the Court noted, Congress could have “easily” written the CTA to pass constitutional muster, raising the possibility that Congress may, down the road, address this gap in the legislation. Further, the court did not address the plaintiffs’ claims under the First, Fourth, and Fifth amendments, nor were other avenues of challenge (e.g., APA compliance) pursued in this case, meaning that even an “easy” fix by Congress may not resolve all concerns with the lawfulness of the CTA and its implementation.
More likely is the possibility that parties across the country will file similar lawsuits seeking a similar result—or a different one, thereby increasing the likelihood of drawing the US Supreme Court into the fray. Already, another party in the Northern District of Ohio has filed a similar lawsuit, but this one seeks a nationwide injunction against the enforcement of the CTA.26 That case is in its early stages. Additionally, other parties may seek to intervene into the Alabama litigation to avail themselves of the same relief that was provided to the named plaintiffs, a strategy that was recently used in the Section 1071 litigation in Texas.27
Ultimately, the CTA remains in effect for all covered entities, aside from the NSBA plaintiffs. Affected parties should watch the possible appeal of this case to the Eleventh Circuit and the Northern District of Ohio case and future announcements from FinCEN about how these developments will impact a party’s duty to report.
Author: File Forms Staff Published: 3/8/2024 File Forms
On Friday, March 1, the U.S. District Court for the Northern District of Alabama declared the Corporate Transparency Act (CTA) and the new Beneficial Ownership Information (BOI) Reporting Requirements unconstitutional in the case of National Small Business United v. Yellen. In a 53-page ruling (the “March 1 Ruling”), Judge Liles C. Burke determined that the CTA goes beyond Congress’ legislative authority as outlined in the Constitution.
On Monday, March 4, FinCEN responded to the ruling and included the following statement:
“FinCEN will comply with the court’s order for as long as it remains in effect. As a result, the government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024). Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time.”
While not explicitly stated, the FinCEN statement confirms that FinCEN intends to continue to enforce the current rules on all other Reporting Companies that are not part of the plaintiff group (which comprises approximately 65-thousand-member organizations out of the nearly 40 million estimated Reporting Companies in 2024).
What Happens Next?
On March 11, 2024, the U.S. government appealed the District Court of Alabama’s ruling to the United States Court of Appeals for the Eleventh Circuit. It is expected that the U.S. government will request a “stay” on the injunction rendered by the March 1 Ruling, thereby maintaining the full force and effect of the CTA until after the appeals processes have been concluded.
The timing of any final decision from the U.S. Court of Appeals for the Eleventh Circuit is uncertain. In 2023, the median time for the Eleventh Circuit to resolve a case was over 9 months. It is also quite possible that the decision rendered there is further appealed to the U.S. Supreme Court, where it is less likely to be overturned based on the composition of the Court justices.
Outlook for Businesses
There is reasonable consensus in the CTA legal community that there are weaknesses to the conclusions reached in the March 1 Ruling. While no prediction is made on the outcome of an appeal, businesses are generally guided to adopt FinCEN’s narrow interpretation of the March 1 Ruling. Business owners and their advisors are advised to exercise discretion and proceed with the assumption that all companies outside the plaintiff group must adhere to the existing CTA/BOI rules. It is recommended to anticipate active enforcement of non-compliance by FinCEN, potentially leading to civil and criminal penalties, until or unless notified otherwise.
FileForms remains committed to offering education and BOI Report filing services, along with ensuring CTA compliance for clients and partners. We will continue to monitor news updates and legislative developments as we have since our company’s inception. With our award-winning technology platform, you can file your BOI Report with FinCEN in minutes, saving time and ensuring both security and peace of mind.
Author: Laura Dodge Published: March 22, 2024 NH Business Review
The Corporate Transparency Act (CTA) was a bipartisan bill enacted by Congress in 2021. It is intended to enhance transparency in entity structures and ownership, including the real estate sector, by addressing money laundering, tax fraud and other illicit activities. The CTA is part of a larger initiative to prevent criminals from using business entities to move money and purchase assets anonymously.
The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) estimates that the CTA will affect over 32 million entities and will largely impact smaller and unregulated companies.
The CTA went into effect Jan. 1, 2024, and requires certain U.S. and foreign entities defined as “reporting companies” to report certain identifying information about the company, its beneficial owners and company applicants to FinCEN within a prescribed time period. A reporting company refers to any LLC, corporation or other entity that was formed by filing paperwork with the Secretary of State or similar office. Foreign companies registered to do business in any U.S. state are also required to report.
Entities that fall into any of 23 categories are exempt from reporting to FinCEN. These generally apply to large, publicly traded companies that are already required to report this type of information. Owners of non-exempt companies are required to report necessary identifying information to FinCEN. For reporting companies formed prior to Jan. 1, 2024, these reports require information about the company and its beneficial owners.
Reporting companies formed prior to 2024 will have until Jan. 1, 2025, to file an initial report. For reporting companies formed on or after Jan. 1, 2024, reports will require information about the company and its beneficial owners, as well as its company applicants.
A company applicant is both the individual who directly files the document that creates or registers the company (i.e., often a paralegal or attorney), and the individual who is primarily responsible for directing or controlling the filing of the relevant document by another.
Entities formed after Jan. 1, 2024, and before Jan. 1, 2025, have 90 days after their date of formation to report, and any entities formed on or after Jan. 1, 2025, will have only 30 days to report. Whenever information submitted to FinCEN changes, a reporting company must submit an updated report within 30 days.
Real estate impacts
The CTA marks a significant shift in the regulatory landscape, particularly in the area of real estate. The primary impact of the CTA on real estate transactions is the reduction of anonymity.
A common practice in real estate transactions is to form special purpose entities (SPE) to acquire, develop, lease and finance real property. Oftentimes, an SPE will hold a title to a property to limit liability, and ownership of the SPE is often structured through a chain of additional entities.
It is also common for ownership percentages and roles in the company to shift throughout a project’s life cycle, as key partners take on more debt or exit the deal. All of these entities may be considered reporting companies subject to the CTA’s requirements unless they qualify as an exemption.
Continuous monitoring of changes in the ownership structure to account for changes in beneficial ownership and ownership percentages is required to ensure compliance with the CTA.
The CTA also adds another layer of risk for lenders in real estate transactions. Compliance with the CTA will be considered as part of the loan underwriting process as well as covenants and obligations of the borrowers. Lenders will need to ensure that anti-money laundering protocols are aligned with the CTA requirements to ensure reporting is done correctly and timely.
Real estate professionals, including agents, brokers and attorneys, will also need to be more vigilant and ensure that transactions involving corporate entities are in line with the CTA. Compliance will require additional due diligence, potentially slowing down transaction times and increasing costs. Additionally, managing and protecting sensitive client data is critical, given privacy concerns.
Effect on homeowners
The average homeowner who holds a title to real estate in their individual name will not be impacted. However, some real estate investors or homeowners form an LLC to purchase property. LLCs are often used to hold titles to rental properties to limit liability and for privacy reasons. Individuals who form LLCs and hold titles to real estate will be required to report under the CTA.
Often, homeowners hold titles to real estate in their revocable trusts. Trusts are not “reporting companies” because they are not formed by filing a document with a secretary of state. However, if an estate or trust holds an interest in a reporting company, an executor, a trustee, settlor and/or beneficiary may be considered a beneficial owner of that reporting company. Settlors and trustees should review current trust holdings and consult with legal and tax professionals to determine what individuals will be subject to the CTA reporting requirements.
In addition to the CTA, some states are enacting laws with similar reporting requirements as the CTA (e.g., New York). Real estate professionals should be aware of any applicable state laws.
Undoubtedly, there will be debates over the balance between the need for transparency and the right to privacy. Although the CTA may increase transparency in the real estate market and make it easier for authorities to identify financial criminals, the increase in regulations will inevitably impact the broader real estate industry.
Laura Dodge is a director in McLane Middleton’s Corporate Department and vice chair of the firm’s Real Estate Practice Group. She can be reached at laura.dodge@mclane.com.
Author: US Census Bureau Staff Published: Feb 8, 2024 Press Release Number CB24-TPS.14
Women owned 41.1% (11.2 million) and minorities owned 36.7% (10 million) of the nation’s nonemployer businesses (those without paid employees) and had $307.9 billion and $345.1 billion, respectively, in receipts in 2020, according to the new Nonemployer Statistics by Demographics (NES-D) released today by the U.S. Census Bureau. There were a total of 27.2 million nonemployer businesses with $1.3 trillion in receipts in 2020.
In addition to demographic characteristics of nonemployer business owners, this release also includes data by urban and rural classification, receipt size of firm, and legal form of organization (e.g., sole proprietorships and partnerships).
The NES-D is an annual statistical series that uses existing administrative records and census data to link demographic characteristics of owners to the universe of nonemployer businesses. Nonemployer businesses are those without paid employees and are subject to federal income tax, with receipts of $1,000 or more. The NES-D statistics are the accompanying dataset to the Annual Business Survey (ABS) data on employer businesses (those with paid employees) and when combined with the ABS, provide a complete picture of business owner demographics, such as sex, race, ethnicity and veteran status.
Highlights for nonemployer businesses in 2020:
Hispanic-owned firms accounted for 16.4% (4.5 million) of nonemployer businesses and had $164.0 billion in receipts.
Veteran-owned firms made up about 4.8% (1.3 million) of nonemployer businesses with $57.0 billion in receipts.
Asian-owned firms accounted for 8.6% (2.3 million) of nonemployer businesses, with receipts of $106.1 billion, the most receipts among businesses owned by minority race groups.
Black or African American-owned firms made up 13.2% (3.6 million) of nonemployer businesses, with receipts of $85.8 billion.
American Indian or Alaska Native-owned firms accounted for 1.2% (329.0 thousand) of nonemployer businesses, with $10.7 billion in receipts.
Native Hawaiian or Other Pacific Islander-owned firms accounted for 0.3% (83.5 thousand) of nonemployer businesses, with $2.8 billion in receipts.
This release also includes demographic statistics of all businesses, those with and without employees, combining results from the previously released 2021 ABS (data year 2020) and the 2020 NES-D (data year 2020).
Highlights from these combined statistics (total employer and nonemployer businesses):
There were 32.9 million employer and nonemployer businesses, with $40.2 trillion in receipts.
Minorities owned 11.1 million businesses, with $1.9 trillion in receipts.
Women owned 12.4 million businesses, with $2.2 trillion in receipts.
Hispanics owned 4.8 million businesses, with $636.2 billion in receipts.
Veterans owned 1.6 million businesses, with $983.7 billion in receipts.
For more information on the methods used to assign demographic characteristics to nonemployer businesses, refer to the NES-D methodology.
Author: Kayla Benjamin Published: 2/27/2024 Washington Informer
Anytime someone rings your doorbell with a sales pitch, they should expect to be met with at least some level of healthy skepticism. That’s especially true if they’re selling something that involves potentially pricey upfront costs, complicated financing arrangements or long-term agreements. Rooftop solar panels often involve one or two of those.
The solar industry does have its share of bad actors. But there are also plenty of reputable solar businesses in the DMV that might send a sales rep to canvas in your neighborhood.
“Legit solar companies still do [door-to-door sales], especially if they’ve done an installation in the area recently — same way as real estate agents operate,” said James Clarke, portfolio manager for the D.C. Sustainable Energy Utility’s Solar for All program.
Moreover, Clarke said, solar energy technology has gotten far more efficient in recent decades, which means rooftop panels have become a good fit for a lot more homes and families’ budgets.
“An installation now can provide, based on the number of panels and the square footage of the roof, well over five kilowatts of power; the average home is using around 3.5 kilowatts,” he said. “So in general, because of the higher efficiency, you’re gonna see savings.”
So how can D.C.-area households — many of which could save big on electric bills with solar — tell the difference between a solid deal and a scam? The Informer spoke with Clarke and DCSEU Managing Director Ernest Jolly about the information homeowners should keep in mind.
Solar Finance Basics
The first piece of advice Jolly offered is something that goes for nearly any big purchase or financial agreement: make sure all the details are in writing, and read carefully before signing.
“What you can depend on is what can be enforced,” Jolly said. “Therefore, what is finally reduced to writing in a contract that homeowners or renters are asked to sign is what you can believe in.”
But reading over any contract about solar panel installation can be daunting and confusing. Understanding a few key terms can help with getting started.
Third-party solar ownership: When a company owns the solar panels, not the homeowner. This can be a good option for households that want to save money on electricity bills but can’t afford a major upfront cost to buy the panels directly, or don’t want to be responsible for maintenance of the panels. There are two common arrangements for third-party solar ownership:
Power Purchasing Agreement (PPA): The homeowner pays a third-party owner for the electricity produced by the panels on their roof. This works because the homeowner pays a lower rate than they’d pay the regular power utility.
Solar lease: The homeowner pays a third-party solar owner a set monthly amount regardless of the amount of energy used. Again, this works when the panels produce enough energy that the household saves more on electricity bills than they pay for the lease each month.
Solar Renewable Energy Certificates (SRECs): A credit that represents the environmental value of emissions-free energy produced. Whoever owns the solar panels earns one SREC for every 1,000 kilowatt-hours (kWh) the panels produce. The dollar value of an SREC differs depending on where you live, and it can change dramatically over time. (D.C. has far and away the best market for SRECs in the country, with each credit being worth over $400 as of February 2024. In Maryland, they’re worth just under $60, and in Virginia around $30.)
Solar loan: Like a loan for any major home improvement project. Homeowners who want to own the solar panels installed on their roof but can’t afford the whole cost upfront can apply for a loan to pay for the panels over time, with interest.
What to Ask Someone Selling Solar
Both Jolly and Clarke recommended homeowners double check any salesperson’s credentials by searching online for the company or agency they say they’re from and calling the number on the website. That’s not just true for solar: Clarke, who previously worked at DC Water, said that scammers pretending to be from utility companies occasionally pop up across industries.
“I would always encourage people not to feel that it is inappropriate to ask for validation — and you don’t have to apologize,” Jolly said. “Give yourself emotional permission to do it. You’re being strong when you do that; you’re exercising your power when you do that.”
Jolly also recommends homeowners take their time deciding. Any sales pitch involving a time-sensitive deal or tight deadline is a big red flag.
Finally, homeowners can look to see if a solar company is on the D.C. Department of Energy and Environment’s list of approved solar installers or check whether they have been vetted by the renewable energy marketplace Energy Sage. (See below for more resources for trustworthy information.)
But just because a company is real doesn’t mean their product or plan is right for you. Here are a few questions to ask upfront:
Under this plan, who owns the solar panels and receives the SRECs and tax incentives?
Who would be responsible for maintaining the panels?
What brand of solar panels and batteries would be used? (Clarke suggests later looking up the brands they mention.)
If it’s a third-party ownership plan, what happens at the end of the lease or contract term? Can the homeowner buy the panels at the end of the agreement?
What happens with the panels if the house is sold to someone new?
Clarke also recommended some other steps for potential buyers to “do their due diligence,” including comparing prices by “getting multiple quotes, vetting multiple installers, and asking around about who’s worked with them before, what projects they’ve done.”
Trustworthy Resources for the Deeper Questions
There is an enormous amount of information online about rooftop solar. For most people, it’s overwhelming, and it can sometimes be difficult to tell which sites are trying to sell something. These three sources are solid. (As a bonus: the last two offer free opportunities to speak with experts and ask your questions to a real, live person.)
EnergySage Marketplace: This is a for-profit company, but it operates kind of like a “Consumer Reports” for solar. You can look at ratings for solar installers, see which ones have been independently vetted by EnergySage, and get cost estimates. The website also has a lot of great explainers about all aspects of household renewable energy, including a great 15-minute guide to solar panels.
Solar United Neighbors: This nonprofit began in D.C. as a solar co-op, a big group of neighbors who all agreed to get solar at the same time so that they could negotiate a better deal. SUN now helps facilitate solar co-ops in D.C. and around the country, as well as providing lots of informational guides. Three other free services SUN offers:
15-minute phone consultations with a solar expert
Feedback on a solar installer’s proposal
Review of your home’s roof to see if it would be a good fit for panels
D.C. Sustainable Energy Utility (DCSEU): This organization is overseen by the D.C. Department of Energy and Environment. On the website or by phone, the DCSEU team can help District residents find out if they are eligible for Solar for All or other government programs and services (these include limited funds for roof repairs or electrical work to accommodate solar installations). They can also provide unbiased answers to questions about rooftop solar proposals.
On Friday, April 12th, President Biden, during remarks at the 33rd National Action Network Convention, highlighted how the Biden-Harris Administration is delivering on creating opportunity in historically under-resourced communities and narrowing the racial wealth gap. The President announced key progress being made to root out bias in the home appraisal process, achieve record federal investment in small disadvantaged businesses, and canceling student loan debt.
Here are just a few examples of how Bidenomics and the President’s Investing in America agenda are already delivering for Black Americans:
Under President Biden, the Black unemployment rate and gap between Black and white unemployment hit record lows.
Black wealth is up 60% relative to pre-pandemic levels.
The share of Black business owners more than doubled between 2019 and 2022.
Black-owned businesses are being created at the fastest rate in 30 years.
The Biden-Harris Administration Announced Additional $7.4 Billion in Student Debt Cancellation
On Friday, April 12th, President Biden announced that 277,000 more Americans will get their student debt canceled, bringing the total debt relief approved by the Biden-Harris Administration to $153 billion for 4.3 million Americans through various actions. This latest round of debt cancellation comes on the heels of President Biden announcement on Monday new plans that, if implemented, would cancel student debt for over 30 million Americans when combined with actions the Administration has taken over the last three years. Learn more about these plans at StudentAid.gov/DebtRelief.
Reference: The National Association of Blacks in Solar and Positive Change Purchasing Cooperative LLC letter of support for The 2024 State of Maryland Justice 40 Legislative Bill.
Good Day,
Delegate Taveras, thank you for asking me as President of The National Association of Blacks in Solar and Positive Change Purchasing Cooperative LLC.. to provide a letter of support for the urgent
need to get the 2024 Maryland State Assembly to pass President Biden’s Justice 40 legislation which needs to be passed here in the state of Maryland during this 2024 Maryland State Legislative Assembly session.
The National Association of Blacks in Solar is a 501 C3 nonprofit organization that advocates and serves as an economic blueprint for self-reliance for the solar and renewal energy companies both large and small, along with increasing market share for African and African American renewable companies. The organization addresses the economic effect of high energy costs for HBCUs.
The organization also seeks to utilize Black American-owned farmlands and HBCU campuses to develop capacity and initiatives for renewable energy projects and to bring down the unemployment of underemployed young African and African men and women.
Also, the organization is designed to educate the African, and African American communities locally and nationally about the economic impacts of climate change and the need for environmental education in the African American community through black talk radio programs such as “Solar Now And The Future With Its Economic Impact On Black America.” I have produced the podcast show since 2016 with thousands of listeners here in the United States and worldwide over the internet.
The National Association of Blacks in Solar and The Positive Change Purchasing Cooperative LLC put together a collaborative effort of African American Companies and applied for a 19 million dollar grant proposal, Entitled Solar Sustainability Across America (SSAA) is a collaborative effort of sectoral partnerships consisting of Tougaloo College, Global Apprenticeship Foundation, Power52 Foundation, and the National Association of Blacks in Solar (NABS).
Our Consortium works to enhance and promote educational training awareness to disadvantaged citizens of all ages and backgrounds. SSAA had support from industry employer partners, other non-profit organizations, faith-based organizations, government officials, educational institutions, and political figures. SSAA would have provided training and job placement for 750 new solar installers and professionals in Maryland, Washington, DC/Virginia, North Carolina, South Carolina, Georgia, and Mississippi.
Our program training model provides 8 weeks of Pre-Apprenticeship training accredited by the National Center for Construction Education and Research (NCCER) which includes an 8-week solar training boot camp followed by a two-year Department of Labor solar installer Apprenticeship.
Our highly regarded training model prepares apprentices for the industry-recognized NABCEP Credentials and Certifications. Wraparound services and mentorship will be provided to mitigate barriers, as well as increase employment retention rates for our graduates. As a part of our wraparound service model apprentices will also receive industry-required tools and materials.
We were not successful in winning the award but we did learn that out of 500 million dollars of grant funding to grantees, we were only able to identify one African American institution, nonprofit, or CDFI. Which was solicited as a grantee: North Carolina A&T University, which received 23.7 million out of 500,000 million dollars from The Good Jobs Challenge through the US Department of Commerce.
Out of eight HBCUs that submitted 11 different applications for workforce development, only two were in the area of renewable energy. Our lead fiduciary is Tougaloo College and North Carolina A&T State University.
We have also learned that The State of Maryland Department of Employment Services was selected as one of the grantees and received 32,000,000 million for workforce development training from the Good Job Training Initiative through the US Department of Commerce.
Ms. Cherie Brooks the President and CEO of Power 52 was one of our collaboration team members from our group’s proposal effort entitled Solar Sustainability Across America (SSAA) 19 million dollar grant.
Ms. Brooks then met with the Maryland state official about applying for funding because her home base of operation is located in Howard County. Ms. Brooks’s nonprofit provides solar, electrical, and other skill sets of training for black and brown low-income and returning citizens. Power52’s service areas are Baltimore City, Baltimore County, Howard County, and Prince George’s County citizens.
With over ten years of service, doing an outstanding job changing the lives of our young people, she was informed by Maryland State officials that all the money was already allocated. The money was committed to other workforce development organizations. She never saw any request for proposal or heard of any that was put out by the state.
Ms. Brooks and I talked so I encouraged her after we met at the US Department of Energy back in February of 2023 to go directly to the US Department. She met and applied directly to the US Department of Energy. I’m very proud to inform you that her company has been awarded a $1.5 million grant from the US Department of Energy over the next three years. Ms. Brooks has personally thanked me for working with her and encouraging her to keep applying for the money.
What I find very interesting is that Mr. Will Shirley, who has served as my Vice President of The National Association of Blacks in Solar and President of Sundial Solar of Jackson, Mississippi, also meeting with Mississippi at their Department of Energy for the State, was informed that all the funding was already committed to other entities and business in the state of Mississippi.
After I provided him with a fact sheet published by the White House Office on Intergovernmental Affairs with the State of Mississippi showed that over 100 million dollars was allocated from President Biden’s Build Back Better and Inflation Reduction Act.
Another major example of the need to pass Justice 40 Legation here in the state of Maryland under former Governor Larry Hogan’s administration, according to an article that appeared in The Guardian News written by Baynard Woods on December 23, 2015, Entitled: Maryland accused of race discrimination over scrapping of Baltimore rail project. The article stated, “Governor Hogan faces a civil rights lawsuit after axing plans for light rail line serving African American areas and Switching funds to roads in the suburbs.”
Also, looking at the fact that only 4 states out of the US 50 state capital legislative bodies have passed the Justice 40 bill cold Rising legislation on the state, which in turn makes funding sent to the——- must be used to serve those under-served communities which that state received the funding. The Governor of that state can not redirect that funding for other purposes
President Joe Biden’s Executive Order 14008, Tackling the Climate Crisis at Home and Abroad. Section 223 of EO 14008 established the Justice40 Initiative, which directs 40% of the overall benefits of certain Federal investments – including investments in clean energy and energy efficiency; clean transit; affordable and sustainable housing; training and workforce development; the remediation and reduction of legacy pollution; and the development of clean water infrastructure – to flow to disadvantaged communities (DACs).
With this being said, What is a Justice40 covered program? A “covered program” is a Federal Government program that falls in the scope of the Justice40 initiative because it includes investments that can benefit disadvantaged communities across one or more of the following seven areas: climate change, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and the development of critical clean water and wastewater infrastructure.
I want to thank you again for allowing me the opportunity to write this letter of support
Sincerely,
Ronald Bethea
President of the National Association of Blacks in Solar (NABS)
and The Positive Change Purchasing Cooperative LLC.
Requiring a State agency, in administering certain federal funds, to allocate 40% of those funds to infrastructure construction projects in overburdened communities and underserved communities and an additional 40% of those funds to infrastructure construction projects in communities of color and communities with a high percentage of low- to moderate-income households in the State; establishing the Justice40 Committee; etc.
HR 40: Introduced in House (01/04/2021) Commission to Study and Develop Reparation Proposals for African Americans Act. This bill establishes the Commission to Study and Develop Reparation Proposals for African Americans. The commission shall examine slavery and discrimination in the colonies and the United States from 1619 to the present and recommend appropriate remedies The commission shall identify (1) the role of the federal and state governments in supporting the institution of slavery, (2) forms of discrimination in the public and private sectors against freed slaves and their descendants, and (3) lingering negative effects of slavery on living African Americans and society.
BIDEN NEEDS TO SIGN AND EXCUTIVE ORDER PUTTING THE REPARATION COMMISSION IN PLACE. There are 2.1 MIILION AFRICAN VOTES ON THE LINE. According to Kamal in Hayti PH. D computer A.I. study that the 20 percent drop in the polls with young African American voters
JUSTIC 40 Initiative Executive orders 14006-14096: A WHOLE-OF-GOVERNMENT INITIATIV
Justice 40: For the first time in our nation’s history, the Federal government has made it a goal that 40 percent of the overall benefits of certain Federal climate, clean energy, affordable and sustainable housing, and other investments flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution. President Biden made this historic commitment when he signed Executive Order 14008 on Tackling the Climate Crisis at Home and Abroad within days of taking office. To continue delivering on his environmental justice vision, President Biden signed Executive Order 14096 on Revitalizing Our Nation’s Commitment to Environmental Justice for All in April 2023.
What kinds of investments fall within the Justice40 Initiative? The categories of investment are: climate change, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and the development of critical clean water and wastewater infrastructure.
How is the Administration implementing the Justice40 Initiative? A national commitment to environmental justice of this magnitude has never been made before. To meet the goal of the Justice40 Initiative, the Administration is transforming hundreds of Federal programs to ensure that disadvantaged communities receive the benefits of new and existing Federal investments. Through the President’s Investing in America Agenda — including the Inflation Reduction Act, Bipartisan Infrastructure Law, and the American Rescue Plan — Federal agencies are making historic investments to advance environmental justice and benefit disadvantaged communities. These investments will help confront decades of underinvestment in disadvantaged communities and bring critical resources to communities that have been overburdened by legacy pollution and environmental hazards.
Requiring a state agency, in administering certain federal funds, to allocate 40% of those funds to infrastructure construction projects in overburdened communities and underserved communities and an additional 40% of those funds to infrastructure construction projects in communities of color and communities with a high percentage of low- to moderate-income households in the State; establishing the Justice40 Committee; etc.
Sponsored by
Delegates Taveras, Holmes, and Kaufman Status In the House – Hearing 3/06 at 1:00 p.m. (Appropriations)
Bill HR2513
Sponsored by Representative Carolyn Maloney Democrat New York
Around the Bill HR2513 which is disproportionately impacting African American women and other women minorities owned nonemployee businesses. Which according to U.S. Census data 36.7% (10 million) of the nation’s nonemployee businesses (those without paid employees) and had $307.9 billion in FY 2022. The world of work has become more complex because of the different types of employee classifications. As a result, more businesses are hiring freelancers, contractors, and employees to handle long-term or short-term projects, in their organizations. In fact, the US has 70.4 million freelancersand 9.6 million self-employed professionals — and this number is still growing.
97% of small businesses are required to file a FinCEN BOI Report in 2024.
Less than 10% of small business owners know of their BOI filing obligations. Do you?
Avoid penalties up to $500/day and $10,000.
The Corporate Transparency Act (CTA) was enacted in 2021 to mitigate illicit financial activities by requiring most companies that conduct business in the U.S. to report specific information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
FinCEN is a bureau of the U.S. Treasury whose mission is to combat financial crimes by collecting and analyzing information about financial transactions to combat money laundering, terrorist financing, and other financial crimes. The CTA’s reporting requirements take effect on January 1, 2024, and the implications for U.S. business owners and their professional service providers are far-reaching. www.FinCEN.gov
Beneficial Ownership Information (BOI) Reporting
Unbeknownst to most business owners and even their trusted advisors, BOI reporting is a novel informational filing that will impact approximately 36 – 40 million businesses in the U.S. Certain companies formed before January 1, 2024, who do not qualify for an exemption must file their initial report by January 1, 2025.
New companies formed after January 1, 2024, only have 90 days from formation to file their initial BOI report. Time is of the essence, and U.S. business owners will undoubtedly turn to their professional service providers for guidance and assistance with this new filing requirement. It’s imperative for business advisors to understand their responsibilities and limitations in assisting their clients with CTA compliance.
“Black America: Our Future is Now in Renewable Energy Industry”
We refuse to be relegated to simply a consumer class in this new renewable energy green market economy. NABS we will be at the forefront, advocating and actively engaging and seeking out public and private funding to make this platform become a reality. By educating the black community locally and nationally about the economic impacts of climate change and the need for environmental education in the black community through black talk radio programs such as “Solar Now and The Future with Its Economic Impact on Black America” by purchasing a ninety-minute weekly time slot with one of the nationally syndicated black owned radio stations. Also, we will work the NABS membership and other stockholders on public policy issues to accomplish the following:
To address the economic effect of high energy cost for HBCUS.
To utilize black American-owned farm lands and HBCU campuses to develop capacity and initiatives for solar installation projects to bring down unemployment and under employment of young black men and women.
To encourage the development of mentorship-owned solar companies that will fully integrate Black Americans into the Renewable Solar Power industry,
To structure a national system for the delivery of cost-saving solar power to our black-owned businesses, our homes, our churches, our schools, our non-profits and other black-owned facilities. We will create a solar jobs training network throughout the country in our black communities,
To establish a Legal Division that will fight for solar policy change for our black municipalities, counties, and communities,
To establish a coalition working with existing black organizations across America for the purposes of securing Congressional support, assuring buy-in from existing solar industry associations, and pursuing many other activities that will support our efforts.
BUILDING A STRONGER, FAIRER GREEN ECONOMY FOR BLACK AMERICA
NABS will request that members of Congressional Black Caucus host an Executive Congressional Hearing on a Green Economic Development Plan for Black America including members of the CBC who serve on oversight committees that play keys roles on climate change and renewable energy, “Solar-Based Economic Development”.
NABS will address this serious issue by establishing a process for evaluating social, political, economic environments and priorities in the development of an individualized long-term solar strategy for HBCUs, Black municipalities, Black county governments, the Black business community, and Black non-profits and demand that the Biden Administration invest 35% of the $2 trillion that his administration plans to invest clean energy in black communities nationally.
The following African-American owned institutions include HBCUs, black-owned banks, businesses, churches, farmers, and property owners, along with targeted funding for African-American owned commercial and residential units nationally through the Property Assessed Clean Energy (PACE) and The Rural Energy for America Program (REAP). The Biden administration is planning to implement these resources over his first term.
To increase the market share for African American solar design, installation and work force development companies. The NASB will work on public policy issues with the following:
African American Mayors Association
Black public service commissioners and black members of PSC Commissions, nationally
Black state legislative caucuses and members, nationally
Black city council members, county commissioners, nationally
To use Property Assessed Clean Energy (PACE) as a national organizing tool to cut energy cost for black business owned and residential properties, nationally and to negotiate with Chain Store Franchisers on Solar for Black Franchisees
To use the Rural Energy for America Program (REAP) which provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses to purchase or install renewable energy systems or make energy efficiency improvements
To negotiate a position with major corporation to serve as off takers for NABS Member Projects on their books.
To negotiate with U.S. DOE Solar Training Network to establish a National Solar STEM Program as well as to establish Solar Job Training Centers at Selected HBCUs and other locations around the country
To negotiate with training platform owners to standardize solar job training in the black community nationwide through NABS members and partnerships
To achieve a National Solar Consultancy for black Institutions, municipalities, counties, and communities
To create a legal department that will work to develop public policy to work with other associations in pursuit or solar policies benefitable black communities nationally
Originally launched in 2022, The People’s Justice40+ Community Benefit Playbook is an organizing tool that provides a framework for communities to leverage the Justice40 Initiative and federal investments within the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, and now the Inflation Reduction Act to achieve community benefits.
In the Playbook, you’ll find a breakdown of the Justice40 Initiative, an analysis of the federal funding process, and an overview of federal climate, economic, and infrastructure investments. You’ll also find five justice centered infrastructure playbooks–energy justice, water justice, economic justice, environmental and climate justice, and transportation justice–that take a deeper dive into some of the major issues plaguing low income, frontline, and fenceline communities. Through these infrastructure playbooks, communities can explore potential strategies for addressing community priorities and identify federal programs and funding opportunities that could meet community needs. To round out the Playbook, you’ll find examples of Community Benefit Agreements, Community Workforce Agreements, and Project Labor Agreements, as well as a step-by-step guide to creating a Community Benefit Plan that can help build community power to advocate for government resources that support the needs of the people.
The 2nd Edition of the Playbook expands on the first edition by providing an updated analysis of the Justice40 Initiative, an overview of the Inflation Reduction Act, and additional information and resources that provide facts and data on the issues your community may be facing and offer potential solutions to address community needs.
The Environmental Protection Network released a Suggested 6-Step Application Guide to applying for the Environmental and Climate Justice Community Change Grants.
Additional Resources as well as Community Engagement and Learning Opportunities.
The Department of Energy also announced the SOLVE IT Prize that provides financial support to communities as they identify and implement clean energy solutions that are tailored to address the unique needs and challenges of their communities.
The White House released an updated list of Justice40 Covered Programs housed within each federal agency.
Regional Environmental Justice Grantmakers will provide subgrants to community-based nonprofits and other eligible subrecipients for assessment, planning, and project development activities. Subgrants through the Grantmakers are expected to become available by Summer 2024. More information on how to apply for these subgrants will be available soon. For now, find more information about your Regional Environmental Justice Grantmaker HERE.
The Justice40 Accelerator created a searchable Justice40 Resource page to help find and identify Justice40 related information, funding, and technical assistance opportunities.
Interested in how the Administration’s Agencies have been implementing Justice40 and incorporating Equity and Environmental Justice concerns into their Agency missions? Check out ECC’s quick reference guide here.
pcoming Community Listening and Engagement Calls and Learning Opportunities
The ACTE was reestablished to advise the Secretary of Transportation on equity issues that center on four equity objectives–expanding access (to affordable and multimodal transportation options), power of community (to have voice in the transportation decisions that impact community members), interventions (to ensure communities benefit from transportation investments), and wealth creation (for small and disadvantaged businesses). The ACTE meets on the first Friday of every other month. You can find committee and subcommittee meeting registration information and materials here.
The EPA: Office of Research and Development is hosting monthly public webinars to discuss EPA research and share resources and information that may be helpful to states, territories, Tribes, and other entities, like communities. You can find a list of upcoming webinars and access previous webinars here.
Last week, the Biden-Harris Administration took major strides in our work to combat the climate crisis and advance historic action on conservation and environmental justice.
In honor of Women’s History Month, President Biden last Wednesday signed an Executive Order on Recognizing and Honoring Women’s History. The Executive Order will increase the representation of women’s history in sites across America and help honor the legacy and contributions of women and girls to our country. By highlighting the role that women and girls have played in shaping the American story, we will tell a more complete account of American history and help create a more equal future.
March 27, 2024: President Biden signs Executive Order on Recognizing and Honoring Women’s History.
Also last week, the U.S. Environmental Protection Agency (EPA) finalized the strongest-ever pollution standards for cars. The new standards for cars will avoid more than 7 billion tons of carbon emissions and provide nearly $100 billion of annual net benefits to society, including $13 billion of annual public health benefits due to improved air quality, and $62 billion in reduced annual fuel costs, and maintenance and repair costs for drivers.
In addition, the U.S. Department of the Interior (DOI) last week announced a final rule from the Bureau of Land Management that will curb the waste of natural gas during the production of oil and gas on federal and Tribal lands.
Also last week, the U.S. Department of Energy (DOE) announced $6 billion as part of President Biden’s Investing in America agenda for 33 projects across more than 20 states to decarbonize energy-intensive industries, strengthen domestic manufacturing, and slash planet-warming emissions.
Other recent key Biden-Harris Administration announcements:
DOE announced $4 billion in tax credits to accelerate domestic clean energy manufacturing, reduce emissions at industrial facilities, and lower costs in energy communities.
EPA announced $206 million to fund local projects and technical assistance to protect and restore the Chesapeake Bay over the next four years and advance environmental justice.
EPA announced $60 million to advance Tribal priorities and support the restoration of Pacific salmon and steelhead in the Columbia River Basin.
The Internal Revenue Service (IRS) announced a revised guidance for the energy communities and bonus credit program under the Inflation Reduction Act, expanding certain rules for determining what an energy community is for the production and investment tax credits.
Keep reading for more updates from the Biden-Harris Administration. If you were forwarded this email, or are not on our list yet, please visit our sign up page.
GET INVOLVED!
UPCOMING MEETINGS/EVENTS
April 4, 2024 from 3:00-4:00 PM ET: EPA Tools and Resources Training Webinar Series: Report on the Environment
Summary: The EPA Tools and Resources Webinar Series translates EPA research and shares research resources and information that are useful, practical/applied and available to meet stakeholders’ research needs.
Federal agencies are seeking public input to help inform the development of funding opportunities, grant processes, policy and program implementation. Below is a list of open Requests for Information and Public Comment.
National Park Foundation and National Park Service: Source Reduction x Circular Economy Initiative to Reduce Plastic Waste in National Parks – REQUEST FOR PROPOSALS
Summary: The National Park Foundation (NPF) is excited to announce a Request for Proposals (RFP) for a new Plastics Reduction and Circularity Grant to reduce plastic waste in national parks. NPF, in collaboration with the National Park Service (NPS), is seeking proposals that represent commitment and collaboration between a park, its concessioner(s) or commercial use authorization holder(s) and/or one or more organization(s) from the park’s gateway community to improve lifecycle management of products, with an emphasis on source reduction of plastics, used in and around National Parks and their gateway communities. The goal is to foster innovative approaches to plastics reduction and recycling from within parks, communities, and commercial operations that will lead to enduring change in national parks and beyond. Please see the Request for Proposals for more information about this opportunity and how to apply.
Environmental Protection Agency (EPA): Stakeholder Engagement on Inflation Reduction Act Programs to Reduce Embodied Greenhouse Gas Emissions Associated with Construction Materials and Products – REQUEST FOR INFORMATION
Summary: The Environmental Protection Agency (EPA) is announcing the first opportunities for public input on new programs focused on lower carbon construction materials made possible by a $350 million investment from the Inflation Reduction Act (IRA). The Agency will hold three public webinars and is accepting written feedback on establishing the new grant and technical assistance programs and a carbon labeling program for construction materials with substantially lower levels of embodied carbon.
White House Office of Management and Budget (OMB), Executive Office of the President: Methods and Leading Practices for Advancing Public Participation and Community Engagement with the Federal Government – REQUEST FOR INFORMATION
Summary: OMB seeks input on the experiences of individuals and organizations, including from underserved communities, with informing Federal Government decision-making and participating in engagement activities with government agencies; examples of leading practices in this space; and other recommendations on available methods, approaches, and tools that could assist in the effort to develop and implement a Federal framework for participation and engagement. OMB welcomes input from a wide and diverse array of stakeholders in the public, private, advocacy, not-for-profit, and philanthropic sectors, including State, local, Tribal, and territorial governments. OMB will review and consider the usability and applicability of responses to this RFI as OMB develops a Federal framework for participation and community engagement (PPCE) and supports agencies in their work to ensure that their policies and actions are responsive to all Americans.
Department of Health and Human Services: Environmental Justice Community Innovator Challenge
Summary: The Office of the Assistant Secretary for Health (OASH) and the Office of Minority Health (OMH) are seeking community-led strategies and tools to address health disparities in communities disproportionately impacted by environmental risks and hazards including those related to climate change, and the cumulative impacts of other stressors. Applications open on March 19, 2024.
Today I signed an Executive Order to increase representation of women’s history in our national parks and historic sites.
Women’s history is American history. It’s time we better recognized women’s critical role in shaping our nation’s story in more places across our country.
While in Puerto Rico, I visited María’s new home that was rebuilt with federal dollars and upgraded to include solar and water storage technology. These new features are critical to building climate resilience and achieving Puerto Rico’s goal of 100% clean energy.
@POTUS and @VP believe that no matter where you live, your income, or your background, every person deserves access to clean water. On #WorldWaterDay, I am celebrating the tireless work across the Biden-Harris Administration to deliver on this vision.”
🌾Celebrated National Ag Day with our NEW Office of Agriculture and Rural Affairs
🚘 Finalized standards for passenger vehicles that will make the U.S. a leader in clean vehicle tech and manufacturing
RESOURCE HUB
Justice40 Covered Programs List: List of federal programs working to advance the President’s Justice40 Initiative, which aims to deliver 40 percent of the overall benefits of certain federal investments to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution.
Invest.gov: Interactive map showing the historic public and private sector investments President Biden’s Investing in America agenda is bringing to states and territories across America.
Inflation Reduction Act Guidebook: This guidebook provides an overview of the clean energy, climate mitigation and resilience, agriculture, and conservation-related tax incentives and investment programs in President Biden’s Inflation Reduction Act.
Inflation Reduction Act Tribal Guidebook: Guidebook to the Inflation Reduction Act’s Clean Energy and Climate Investments in Indian Country, which provides descriptions of the law’s tax incentives and funding programs for which Tribes are eligible.
Direct Pay Through the Inflation Reduction Act: Find resources on the Inflation Reduction Act’s “elective pay” (often called “direct pay”) provisions, through which tax-exempt and governmental entities can take advantage of tax credits for building clean energy projects.
Tribal Access to Capital Clearinghouse: A website that provides a searchable database of federal funding opportunities, including grants and loans, available to Tribal Nations and Native businesses.
Grants.gov: Learn about current federal grant opportunities.
Cleanenergy.gov: A one-stop shop for information on President Biden’s Investing in America agenda and how the Inflation Reduction Act helps lower energy costs for consumers and small businesses while creating good-paying jobs as America’s clean energy economy and manufacturing sectors grow.
DOE Interactive Map: Interactive tool showcasing where clean energy investments are occurring across the United States thanks to President Biden’s Investing in America agenda.
Energy Savings Hub | Department of Energy: Access resources made possible by President Biden’s Investing in America agenda, which will help lower your energy costs and make your home safer and more comfortable while helping the planet.
Environmental Justice Scorecard: Find information about what federal agencies are doing to advance environmental justice in communities across America.
Department of Housing and Urban Development Funding Navigator: Find hundreds of available Inflation Reduction Act, Bipartisan Infrastructure Law, and other programs across a range of federal agencies in these categories: Energy Efficiency and Renewables, Utility Scale Energy, Resiliency, Lead and Healthy Housing, Brownfield and Waste Management, Transportation, Broadband, Workforce Development and Environmental Justice.
Department of Transportation Navigator: Explore federal funding opportunities that help plan for and deliver transformative infrastructure projects and services.
Wetland and Water Protection Resource Guide: Resource Guide highlighting technical assistance and funding opportunities available across the federal government for Tribes, States, Territories, local governments, private land owners, and non-governmental organizations to advance water resource protection.
The U.S. Department of Agriculture (USDA) announced a $124 million investment in renewable energy and fertilizer production projects in 44 states to lower energy costs, generate new income and create jobs for U.S. farmers, ranchers, agricultural producers and rural small businesses.
The U.S. General Services Administration (GSA) announced $25 million for electrical vehicle supply equipment, or EV charging ports, at federal buildings across the nation.
DOE announced $22 million to improve planning, siting, and permitting processes for large-scale renewable energy facilities.
EPA announced $24 million in grants to support states, U.S. territories, and Tribes in providing technical assistance to businesses to develop and adopt pollution prevention practices.
DOE opened applications for the 2024 Renew America’s Schools Prize, which will award $180 million to districts across the country engaging in strategic partnerships to build capacity and implement energy upgrades at K-12 schools, lowering energy use and costs, improving indoor air quality, and fostering healthier learning environment.
DOE announced $18 million for clean energy and economic development in 30 historically disadvantaged communities.
EPA announced $12 million to protect salmon by reducing toxic tire dust, other pollutants in stormwater.
DOI announced $11 million to restore our nation’s lands and water through 29 locally led, landscape-scale restoration projects across 18 states and the District of Columbia.
EPA finalized new safeguards for communities and the environment from facilities that store and could discharge dangerous chemicals into a river, lake, or other waterbody.
DOE launched the pilot of the Clean Energy Connector, a tool that connects families to solar energy through HHS’s Low-Income Home Energy Assistance Program (LIHEAP).
The U.S. Department of Energy (DOE) Solar Energy Technologies Office (SETO) announced the Concentrating Solar Flux to Heat and Power funding opportunity, which will award $30 million for innovative research, development, and demonstration projects that accelerate the large-scale development and deployment of concentrating solar-thermal power (CSP) technology.
FOA NUMBER: DE-FOA-0003269
FUNDING AMOUNT: $30 Million
CONCEPT PAPERS DUE DATE: 5/16/2024, 5 p.m. ET
FULL APPLICATION DUE DATE:
8/8/2024, 5 p.m. ET
CSP technologies offer unique value as a renewable energy resource that can readily deliver high-temperature heat for uses in the industrial sector and incorporate energy storage for on-demand solar power.
SETO is interested in projects in three topic areas:
Topic Area 1: Scalable Concentrating Solar Collectors
Topic Area 2: Scalable Supercritical Carbon Dioxide (sCO2) Turbomachinery
Topic Area 3: Scalable Concentrating Solar-thermal Receivers and Reactors
The goals of this funding opportunity announcement (FOA) are aligned with DOE’s target of achieving a levelized cost of heat of $0.02 per kilowatt-hour and levelized cost of electricity of $0.05 kilowatt-hour by 2030. The FOA also supports the goals of the DOE’s Industrial Heat Shot, Hydrogen Shot, and Clean Fuels & Products Shot.
SETO anticipates making approximately six to 16 awards under this FOA ranging from $750,000 to $10 million. SETO encourages diverse teams from universities, nonprofit and for-profit companies, state and local governments, and Tribal Nations to apply.
Prior to submitting a full application, applicants must submit a concept paper by May 16 at 5 p.m. ET.
TODAY—Vice President Kamala Harris and EPA Administrator Michael Regan announced $20 billion in EPA climate finance grants. They unveiled the Greenhouse Gas Reduction Fund (GGRF) — EPA’s flagship program under the Inflation Reduction Act. Investments from the GGRF will reduce pollution, improve public health, and accelerate the transition to clean energy. This funding will make a major impact in communities overburdened by pollution. #ActOnClimate #DefendOurClimate
This Saturday in Louisiana
Celebrate Earth Month at the Re-Igniting Community Awareness event this Saturday, April 6, at Willow Chute Baptist Church in Shreveport! The event is free to all, children are welcome, and lunch will be provided.Register here!
WASHINGTON, DC – April 3, 2024 Over 50 local, state, and national organizations, spearheaded by the Nigerian Center in Washington, D.C., are urgently urging Department of Homeland Security Secretary Alejandro Mayorkas and Secretary of State Antony Blinken to grant immediate designation of Special Student Relief (SSR) for Nigerian students. This designation is crucial as Nigeria currently grapples with one of its most severe economic downturns in recent memory, ignited by soaring inflation rates exacerbated by monetary measures, resulting in a historic decline in the value of the national currency, the naira. As of April 1, 2024, the exchange rate stands at 1,304 to $1. Such currency fluctuations can significantly escalate the cost of education, rendering it challenging for students and their families to afford these expenses.
The Department of Homeland Security (DHS) possesses the authority to suspend certain regulatory requirements for F-1 students and issue Special Student Relief (SSR) benefits under emergent circumstances such as natural disasters, armed conflict, and financial crises. F-1 students from countries undergoing such conditions encounter substantial economic hardship. SSR permits students directly impacted by the crises to apply for employment authorization to work off-campus, exempt them from regular student employment requirements, and enable them to reduce their course loads if necessary.
Individuals seeking immigration assistance are encouraged to reach out to the Nigerian Center online or via phone at 202-330-0352.
“Nigeria, as one of Africa’s most populous nations and a significant contributor to global academic endeavors, faces economic turmoil jeopardizing the educational aspirations of its youth. The plea for SSR designation underscores the urgent need for compassionate and pragmatic measures to support Nigeria,” stated Nkechi Ilechie, Policy Director, Nigerian Center.
“During the recent visit to Nigeria, Secretary Antony Blinken reiterated the United States’ commitment to Nigeria across various sectors, including economic, military assistance, and cultural exchanges. SSR presents an opportunity to actualize these commitments as it directly impacts Nigerian citizens studying and preparing for global leadership opportunities that strengthen US-Nigeria ties,” remarked Gbenga Ogunjimi, Executive Director, Nigerian Center.
Letter signatories : African Communities Together (ACT) African Immigration Initiative Al Otro Lado American Friends Service Committee (AFSC) Asian Americans Advancing Justice | AAJC Asian Children’s Educational Fellowship Capital Area Immigrants’ Rights Coalition Catholic Legal Immigration Network, Inc. Chacón Center for Immigrant Justice Church Women United in New York State Coalition for Humane Immigrant Rights (CHIRLA) Communities United for Status & Protection (CUSP) Delaware Africa Coalition Deported Asylum Seekers Assistance Project DRUM – Desis Rising Up & Moving Estrella del Paso (Formerly DMRS) FAITH IN TEXAS Global African Business Association (GABA) Global Vision Foundation, inc Haitian Bridge Alliance Illinois Coalition for Immigrant and Refugee Rights Immigrant Legal Advocacy Project International Institute of New England Justice Action Center Louisiana Advocates for Immigrants in Detention NAPAC USA National Employment Law Project.
National Partnership for New Americans Nigerian American Lawyers Association (NALA) Nigerian Center Nigerian Economic Summit Group Omo Yoruba Association, Inc Poder Latinx RCCG – Jesus House, DC Rebirth Hub Africa Red Eagle Enterprises Sisters of St. Dominic of Blauvelt, New York Strangers No Longer (Michigan) The Campaign for Hong Kong The Coalition of African & Caribbean Communities-Philadelphia (AFRICOM) The Young Center for Immigrant Children’s Rights True Alliance Center Inc. Page | 4 UndocuBlack Network United African Organization United Nigerian Americans council-md Wilco Justice Alliance Wind of the Spirit Immigrant Resource Center Women Advancing Nutrition Dietetics and Agriculture Yoruba Unite of North Carolina Zumunta Association USA Inc
At Unitees Screen-print & Embroidery, we are constantly striving to innovate and improve our practices to better serve both you, our customers, and the environment we all share. We are thrilled to announce a significant step towards sustainability by transitioning to water-based inks in our screen-printing process.
This change aligns with our commitment to reducing our carbon footprint and promoting a cleaner, healthier environment. Water-based inks are environmentally friendly, as they contain fewer chemicals and volatile organic compounds (VOCs) compared to traditional plastisol inks. This switch allows us to offer you high-quality prints while minimizing our impact on the planet. Plus, they feel amazingly soft when printed.
Furthermore, we are excited to share that Unitees has been at the forefront of utilizing alternative decoration processes to enhance our garment decorating and design offerings. Alongside our transition to water-based inks, we have incorporated techniques such as Reverse-Tie-Dye and batik into our repertoire. These methods not only add unique textures and patterns to your garments but also showcase our commitment to creativity and sustainability.
We are proud to lead the way in embracing eco-friendly practices in the custom apparel industry. As always, we remain dedicated to providing you with the best possible service and products. Thank you for your continued support as we work towards a cleaner, greener future together.
Should you have any questions or need further information about our new ink options or decoration processes, please do not hesitate to contact us. We look forward to continuing to serve you with our enhanced environmentally conscious offerings.
Grants.gov is where you’ll take the first steps to apply for an Office of Justice Programs grant. Register or confirm your Grants.gov registration, profile, and user roles. Review the required forms (SF-424 and SF-LLL). Search for OJP funding opportunities and review solicitation details. Apply to create a Grants.gov Workspace and add users who will contribute to the application.
Get started in Grants.gov today!
OJP Grant Application Resource Guide: This resource contains information to help you prepare and submit applications for OJP funding and offers guidance on award administration.
OJP Funding Resource Center: Find current opportunities, solicitation requirements, forms and worksheets, and post-award instructions to help as you apply for and manage OJP awards.
DOJ Grants Financial Guide: Learn about the laws, rules, and regulations that affect the financial and administrative management of an OJP award.
Author: US DOE NREL Staff Published: 3/20/2024 National Renewable Energy Lab (NREL)
A recent study authored by researchers at the Lawrence Berkeley National Laboratory (LBNL) and the National Renewable Energy Lab (NREL) supporting Solar Energy Innovation Network (SEIN) Round 3 multi-stakeholder teams dove into a potential causal relationships between rates of commercial and residential solar installations, finding that there are interesting links in solar adoption behaviors and decision-making between these two market groups.
Solar analysts found a quantifiable and persistent increase in residential solar adoptions in proximity to nonresidential solar installations. Then they studied the type of nonresidential building (commercial, government, or houses of worship) to see if that changed the amount of measurable influence on nearby residential adoptions. Findings show that each commercial installation influences around 0.06 residential installations per quarter, each government and school installation influences around 0.3 installations per quarter, and each house-of-worship installation influences around 1.2 installations per quarter.
The study suggests that nonresidential solar installations can successfully serve as partners in policies to “seed” local residential adoption.
Please contact Kamyria Coney or Sara Farrar with any questions about the Solar Energy Innovation Network.
This research is supported by the U.S. Department of Energy Solar Energy Technologies Office, which supports early-stage research and development in three technology areas: photovoltaics, concentrating solar-thermal power, and systems integration with the goal of improving the affordability, reliability, and domestic benefit of solar technologies on the grid. Learn more: https://energy.gov/solar-office.
[Issued September 18, 2023]
[Issued September 18, 2023]
[Issued September 18, 2023]
[Issued September 18, 2023]
