On September 29, 2022, the US Treasury Department Financial Crimes Enforcement Network, “FinCEN”, issued its final rule implementing requirements to report beneficial ownership information from certain entities under the Corporate Transparency Act. The goal of this legislation is to fight the financing of terrorism and money laundering. The rule takes effect on January 1, 2024. Any “reporting company” existing or registered before then must file an initial report by January 1, 2025. Any reporting company created or registered after January 1, 2024 must file its initial report within 30 days after creation or registration.
What is to be reported? FinCEN is in the process of creating forms for this and will publish such in the Federal Register. Failure to comply with the reporting requirements can lead to civil and criminal penalties including a maximum civil penalty of $500 per day, up to $10,000, and imprisonment for up to two years.
Who must report? Domestic companies including smaller corporations, limited liability companies, limited liability partnerships, limited liability limited partnerships, business trusts (statutory trusts or Massachusetts business trusts) and limited partnerships. For example, if you have an LLC that owns a rental property, the LLC is a reporting company. Foreign companies operating in the USA under the law of a foreign country and registered to do business in any state or tribal jurisdiction, or any entity created by filing a document with a secretary of state or similar state or tribal office, are also included.
There are 23 categories of entities exempt from reporting. It appears that most estate planning trusts will not have to report to FinCEN. To be a reporting company the trust would have to file a registration document with a secretary of state or similar state or tribal office; most revocable and irrevocable trusts do not do this. Charitable trusts are specifically exempt from reporting.
Even though most trusts will not qualify as reporting companies, the law impacts any entity with an ownership interest in a U.S. company, including foreign trusts. Reporting companies must report to FinCEN each owner that owns more than 25% of the company, including trusts, regardless of where the trust is domiciled and whether it is registered with any secretary of state.
The Small Business Reorganization Act became effective on February 19, 2020. The new law added Subchapter V to Chapter 11 of the Bankruptcy Code, allowing businesses to reorganize rather than liquidate. It streamlines the process for small businesses. Only individuals or entities engaged in commercial or business activities with non-contingent liquidated debts below $2.7 million, adjusted for inflation, may file under this code section. However, the CARES Act temporarily increased this amount to $7.5 million, but that expires on March 26, 2021. Only the debtor may file a plan in Subchapter V; consequently, there are no creditor competing plans. No financial documents need be filed.
The debtor must complete detailed schedules and a Statement of Financial Affairs to provide the court and creditors with information as to its assets, liabilities and financial condition. Additionally, 50% of the total debt must have arisen from the commercial or business activities of the debtor. The debtor remains in control of its business although it can be removed for cause. The trustee will then step in. A trustee is appointed in every case, but the trustee has limited powers.
Some of the more burdensome requirements of Chapter 11 are eliminated. The debtor is not required to pay fees to the United State Trustee. The debtor is not required to obtain or write a Disclosure Statement, unless ordered by the court. There are no Creditor’s Committees unless the court allows it. There is no requirement that at least one class of impaired creditors vote to accept the plan; only the debtor files a plan.
The administrative expenses must be paid as soon as the plan is confirmed. There is no absolute priority rule. Thus, equity owners may retain their interest in the company even if they do not pay creditors in full and do not provide any new value. Instead, the debtor projects its disposable income for a period of 3 to 5 years and this income must be paid to creditors. Provided the debtor can satisfy these requirements, reorganization under this new code section is preferable.
The following new laws become effective in Arizona on August 9, 2017:
The Motor Vehicle Division cannot suspend the licenses of those who fail to respond to their citations.
Dog racing is now illegal across the state.
For spouses or dependents of military members killed in the line of duty, free car registrations become available.
The minimum wage will be increasing for workers, who can now expect $10 an hour.
Homeowners with short-term rental homes on sharing websites like Airbnb and Homeaway will now have state taxes collected from the companies. The website companies will then forward the taxes to the Department of Revenue.
In upcoming elections, pamphlets must be mailed to every household with registered voters showing what will be on the ballots.
Got one of those plastic covers on your license plate to thwart photo radar? They are now illegal.
Other laws range from expanding who can teach in Arizona classrooms and when police need warrants to track cell phones to exactly how much of someone’s foot a podiatrist can amputate (it’s a toe — not a foot).
Legislation to bar the state’s newest drivers from using cell phones does not take effect until July 1, 2018.
And a bill to set up procedures for people to argue about what they are charged by out-of-network hospitals does not become law until Jan. 1, 2019.
Arizona’s new law mandating paid sick leave starts July 1. Businesses and non-profit groups could face penalties for failing to keep records, post notices and could incur damages for failing to provide paid sick time. Employers who retaliate against workers exercising their rights could face fines of at least $150 per day.
The law mandating as many as 40 hours of paid sick leave, which was approved by voters in November of 2016 that also raised the state’s minimum wage, applies to almost all businesses and non-profits with at least one Arizona employee including entities not headquartered in the state. The only exceptions are those employed by Arizona’s state or federal government and sole proprietors. So, whether full-time or part-time, temporary or seasonal, all will receive paid sick time. They will be able to use this benefit for a variety of reasons. There are a number of reasons where an employee may require sick leave. One of the reasons could be that an employee experienced an injury whilst working, meaning that they needed some time off. Whilst they probably should be entitled to sick pay, the employer should also try and organize some worker’s compensation to help the employee return to work easily. To learn more about this compensation, employers may want to visit FFVA Mutual to find out more.
The minimum requirements are 24 hours of paid sick time off annually for businesses with 14 or fewer workers, or 40 hours off for entities with 15 or more people. Employees are entitled to receive paid sick-time off; independent contractors are not. The general rule is that if you issue a W-2 to a worker, that person is an employee entitled to the benefit.
The law allows paid leave for various reasons besides sickness or injury such as domestic violence, sexual abuse, stalking or the closing of a child’s school owing to a public health emergency. Additionally, reasons include taking time off to meet with an attorney, arranging shelter services or securing safe housing, as well as issues on behalf of family members. The definition of family members is quite broad including siblings, grandparents, in-laws and others. Significantly, an employer can request proof or documentation only after a worker has been absent for three days in a row. And, when proof is required, it can come in a variety of forms such as a doctor’s note, a police report, a letter from an attorney or simply a worker’s own statement that he or she needed time off. Employers generally will be required to grant the time off. Penalties and damages await companies that ignore the new law.
Nine states are making estate tax changes for 2017. Altogether, eighteen states plus the District of Columbia impose either estate or inheritance taxes or both. They are Oregon, Washington state, Minnesota, Illinois, New Jersey, New York, Vermont, Hawaii, Kentucky, Nebraska, Iowa, Maryland, Pennsylvania, Connecticut, Massachusetts, Maine, Rhode Island, and Delaware.
As an example, New Jersey has had a long time $675,000 exemption from the state estate tax but now it will be $2 million dollars. Similar changes are in effect for the other states. Because the federal estate tax exemption amount is indexed to inflation, it rose from $5.45 million dollars for 2016 to $5.49 million dollars in 2017. So, for a married couple the exemption amount is a little shy of $11 million dollars.
How much money you can leave to your heirs free of state tax levies depends on where you live and own property, whom you’re leaving your money to, and whether your estate planning is up to date. Any doubt about this, please see an estate planning attorney for assistance.