Wealth Actually

While all families in the U.S. should have an estate plan, a comprehensive plan is particularly important when your family ties and assets span more than one country.

Estate planning can be a challenging task for anyone, but add multiple citizenships and foreign assets into the mix, and it can become formidable. That said, failing to have a plan in place can leave your family at risk.

To help us navigate these issues, we have estate planning attorney SHANNON MCNULTY with us to talk about how to protect your family when you cross borders.

Biography

Shannon McNulty is an estate planning attorney and Founder of THE VILLAGE LAW FIRM in New York City, She provides comprehensive tax and estate planning for New Yorkers and their families. Shannon has a particular focus on global families with young children.

Shannon has earned the CFP® designation from the Certified Financial Planner Board of Standards. And she is on the Board of Directors of the Estate Planning Council of New York City (with me).

Shannon is host of the GLOBAL VILLAGE LAW AND MONEY PODCAST- a resource to help foreign nationals make smart legal and financial decisions.

Outline

Tell us how you came to work with global families in your practice.

Why is it so important to for global families to have an estate plan in place?

What are the basic things that an estate plan for these families should address?

Guardianship for kids;

Arrange for the fast, easy transfer of your assets;

Incapacity planning;

Minimize taxes

Can a parent designate a guardian for their children who does not live in the U.S.?

What happens if no guardian is designated?

Can you explain how to make sure your assets quickly go to the people who you want to have them if you pass away?

If your kids are minors, who will manage the assets for them?

What is incapacity planning? Why is it important?

What do global families need to know about taxes in the estate planning context?

Review

Before we finish, maybe you can give us a recap of the essential documents that global families living in the U.S. should have in place?

Some comments on Shannon's Podcast

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

JARED DILLIAN is one of the authentic unfiltered voices in finance and trading. He is also a true polymath.

His newsletters include The Daily Dirtnap, a daily market newsletter for investment professionals, and We’re Gonna Get Those Bastards, which is about everything “depraved”, especially finance, culture, music and sex.  

He has a new book coming out in early 2024 called “No Worries” which brings his unique perspective to personal finance topics with the goal of helping people reduce anxiety around the wealth building process.

https://www.amazon.com/No-Worries-live-stress-financial-ebook/dp/B0BZZFQPBG/

Back to the polymath part . . . In his spare time, Jared is a progressive house DJ, a short story writer, and speaks frequently on mental health issues at financial institutions.  It’s Jared’s ability to cultivate his creative side that sets him apart from the rest of the noise in the financial world.

JARED'S BACKGROUND - 

Early Life and the Coast Guard

Lehman Brothers- The Experience and the

Newsletter

South Carolina

HOW DID JARED GET INTO THE WRITING? (HE STARTED EARLY!)

THE NEWSLETTERS - THE DAILY DIRTNAP and THEN "BASTARDS"

THE TWO RECENT BOOKS

- WE"RE GONNA GET THOSE BASTARDS

https://www.amazon.com/Those-Bastards-essays-creativity-meaning-ebook/dp/B0BZST4Z5P/

- NO WORRIES -HOW DOES WHAT YOU DO INVESTMENT-WISE CONTRAST WITH THE CONVENTIONAL WISDOM OUT THERE?

TRADITONAL vs SOCIAL MEDIA

DJ / MUSIC / FICTION - HOW DO THESE ENDEAVORS HELP YOUR WRITING?

WHAT ARE YOU WORRIED ABOUT CURRENTLY (MARKETS OR OTHERWISE?)

HOW DO WE FIND JARED?

WWW.JAREDDILLIAN.COM

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

https://open.spotify.com/show/51hVAo0WB8Lp1ECeyCWZhC

"September 29, 1913: the steamship Dresden is halfway between Belgium and England. On board is one of the most famous men in the world, Rudolf Diesel, whose new internal combustion engine is on the verge of revolutionizing global industry forever. But Diesel never arrives at his destination. He vanishes during the night and headlines around the world wonder if it was an accident, suicide, or murder."

Author, DOUG BRUNT, takes us on a journey into the life of this modern day Tesla.

We talk about his latest book, "The Mysterious Case of Rudolf Diesel."

In this wide-ranging discussion, we get into the world of writing, the entrepreneurism of being an author, the differences between fiction and non-fiction and his "Dedicated" podcast with the leading lights in the publishing world.

It's a great listen for budding authors, readers and entrepreneurs.

https://www.amazon.com/Mysterious-Case-Rudolf-Diesel-Deception-ebook/dp/B0BV123PC8/ref=sr_1_2?crid=34B7KZ2Y3XBDE&keywords=doug+brunt&qid=1694454066&s=digital-text&sprefix=brunt+%2Cdigital-text%2C128&sr=1-2

Doug's Background

From Entrepreneur to Writer

Fiction to Non-Fiction-

What is different? How did you research the book?Whom do you lean on for advice/notes as you go through the process?

The Mysterious Case of Rudolf Diesel

What did you learn about the man in your research?The device to interject Rockefeller and Wilhelm for context Diesel's seismic impact- why has he been forgotten?

Where do you place him in the pantheon of inventors?

The Dedicated Podcast

What do you learn in those discussions?How do we keep track of your podcast?When does the book come out and where do we buy it?

THE MYSTERIOUS CASE OF RUDOLF DIESEL

DEDICATED PODCAST

https://open.spotify.com/show/30nZjASHZdffdfDanIaAgz

DOUG BRUNT TWITTER (@dougbrunt)

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

Philanthropy is one of the most important tools for families to strengthen their communities, establish their legacy and communicate their values - both inwardly and outwardly. What happens when the organizations that receive family resources don't fulfill the donor's intent? What if the charities mean well, but aren't effective? What if the charities use the resources for something else entirely? Well, these issues came up in a big way when the Robertson Family of A&P Supermarket fame disagreed with the way Princeton handled the proceeds of a $35 million gift. Author, DOUG WHITE is going to lay out the case, explain where it went wrong, and give us some lessons on how to avoid future quagmires around donor intent.

https://open.spotify.com/episode/4H0MEi1bLT697JKlX5Qquj?si=zculG00TSL6n_Og5eT8jQw

DOUG WHITE, a long-time leader in the nation’s philanthropic community, is a 5-time author, teacher, and an advisor to nonprofit organizations and philanthropists. He is Co-Chair of the FoolProof Foundation’s Walter Cronkite Project Committee and a governing board member of the Secular Coalition of America.

He is the former director of Columbia University’s Master of Science in Fundraising Management program, where, in addition to his extensive management responsibilities, he taught board governance, ethics and fundraising. He is also the former academic director of New York University’s Heyman Center for Philanthropy and Fundraising. He has also been an advisor to BoardSource, the nation’s leading organization dedicated to “building exceptional nonprofit boards and inspiring board service.”

Doug has written five books:

“Wounded Charity” (Paragon House, 2019)

“Abusing Donor Intent” (Paragon House, 2014)

“The Nonprofit Challenge: Integrating Ethics into the Purpose and Promise of Our Nation’s Charities” (Palgrave Macmillan, 2010), 

“Charity on Trial: What You Need to Know Before You Give” (Barricade Books, 2007),

“The Art of Planned Giving: Understanding Donors and the Culture of Giving” (John Wiley & Sons, 1997)

His expertise includes fundraising strategy, board governance, improving organizational processes, and ethical decision-making.

Introduction and Doug's Background

The Role of Philanthropy

Help for Donors

Help for Charities

Donor Intent - The Robertson / Princeton Case

The Robertsons (Descendants of Charles and Marie Robertson)

Source of Wealth (A&P Supermarket Fortune)

The Desire to Build the Woodrow Wilson School After JFK in 1961

The Gift- $35 Million in 1961 (Robertson Foundation: > $900mm in 2008)

The Mistake in Structuring (and codifying) the Gift

Where did Princeton veer off course? Funds used for other purposes

The Conflict between Charity and Family when the Patriarch Died

The Expense ($45mm in legal fees by both sides!)

Princeton's Explanation:

Good practices for families making the gift (and monitoring it)

Establishing and Codifying Donor Intent

Balancing Rigidity and Flexibility around terms and uses of the gift

Drawing up a Binding Agreement

Communication (Oversight at the Charity and the Family)

Performance Metrics

Accountability Structures and Procedures

https://www.amazon.com/Abusing-Donor-Intent-Robertson-University/dp/1557789096

DOUG's CONTACT INFORMATION

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

This episode is a little different. I'm going to talk about the importance of balance and health. This time I'm the example. I'm hitting the half century mark this year. After 3 years of COVID disrepair and neglect, I knew I needed a change. In this episode, I'm going to describe those changes and what it's done for me.

I'll also be commenting on the significant gap between health, fitness and the wealth management industrial complex. In brief, I think the industry has a huge blind spot around the intersection of health and wealth and is dangerously ignorant about the widening time and expense divide between one's late career and death.

To help me make sense of this is, noted expert, Phil Pearlman. DR. PHIL PEARLMAN, is the founder of THE PEARL INSTITUTE. He is an expert in the areas of personal health, human change processes, and systems integration.

Phil and I didn't work together. However, I hope his unique perspective on balancing career, fitness, mental health and other facets help put my experience into context and give the audience some lessons from my journey.

About Phil

DR. PHIL PEARLMAN, is the founder of THE PEARL INSTITUTE. He is an expert in the areas of personal health, human change processes, and systems integration.

Phil is the author of The Primecuts Newsletter, which focuses on cultivating a healthy lifestyle, mindset, and identity through the powers of creativity, reinvention, and grit.

Phil is an advisor to and investor in social/digital media companies across stages of development. Previously, he served as CBO and CMO at Osprey Funds, EVP at Bank OZK, Executive Editor at Stocktwits, and Interactive Editor at Yahoo Finance.

Phil earned a doctor of psychology degree from Argosy University.

He lives with his wife and two boys in Montebello, New York.

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

"Venture Capital" is a small subset of private equity surrounded in mystique and fable. In reality, the world of start-ups is filled with the highs and lows of hard work, loneliness, crushing disappointment and, sometimes, unbelievable success. The bold founders usually have a vision to disrupt the status quo and build a new world around that idea. The VC community is a unique culture that understands the founders' motivations. It provides the resources, support and discipline to help them prove their idea, grow, survive, adapt and thrive in the face of the longest odds. They say "it takes a village." In "Venture Capital", the hope is that these mavericks are surrounded by an ecosystem of investors that understand the disruption they feed and have the patience to let them manifest their vision.

JULIE FREDRICKSON is the Managing Partner of CHAOTIC CAPITAL. She will help us understand what it takes to survive and thrive in this space and skewer some sacred cows along the way.

Julie's Background

"I’m a founder with experience in retail and e-com businesses across all stages. I’ve raised from venture, PE, and crazy people. for everything from cosmetics to online advertising. A couple of my companies even exited and are still around.

My first company was Coutorture Media, a luxury affiliate publishing and e-commerce network acquired by Sugar Inc. I then founded playAPI, a developer tool kit and SaaS platform for digital brand marketers. Most recently I went physical with Stowaway Cosmetics a direct to consumer cosmetics brand, which is now part of WIN Brands Group."

Venture Capital Generally-

What does success of individual investment look like?What does success of portfolio look like?

Differentiation

1. Underwriting Businesses: Asset-Light & Equity-Efficient: "We focus on ventures fitting the VC mold, prioritizing scalable, asset-light companies that require minimal equity financing. Two of our most successful seed investments raised <$50 million to achieve unicorn status while earning hundreds of millions of dollars in revenue and tens of millions of dollars in profits per year."2. Founder's Unique Point Of Leverage: "Every successful startup has a unique point of leverage that allows them to gain escape velocity going from 0 to 1. We seek startups that possess a proprietary advantage such as 

Pre-existing customer relationships, 

Proprietary community driven distribution channels, or 

Innovative technology, to propel their initial growth and achieve escape velocity."

3. Resilient to Competition: "We invest in companies whose products and solutions would be painful for incumbents to replicate. We look for those that:

Cannibalize existing profit centers, 

Disintermediate legacy distribution models, or 

Require replatforming to create an insurmountable competitive edge."

4. "Avoiding Over-Complexity: Great startups must maintain maniacal focus while they scale.Acknowledging the high failure rate of startups, we steer clear of those with multiple dependencies, instead concentrating on businesses with a single, transformative opportunity for success"

CURRENT CONDITIONS

Raising Capital

Deploying Capital

Macro Environment and its effect on allocators - how much do you stay focused on your mission vs pay attention to what's happening in the world- how does that work

LIGHTNING ROUND QUESTIONS

First over the wall vs let others make rookie mistakes

Do you diversify investments around and idea?

How real is the East Coast / West Coast Capital Culture schism? International?

How do you avoid "Jangly key syndrome?"

Without giving away the secret sauce, how do you evaluate founders / leadership?

Any post-COVID lessons or trends to focus on? Location, WFH, trends in Gen-Z etc?) 

DISCLAIMER: THIS PODCAST IS FOR EDUCATIONAL PURPOSES AND DOES NOT REPRESENT AN ENDORSEMENT OF CHAOTIC CAPITAL AS AN INVESTMENT.

HOW DO WE STAY IN TOUCH?

CHAOTIC CAPITAL

https://twitter.com/almostmedia

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

Real Estate investing is seen as the holy grail of passive income and wealth independence. One of the popular facets of real estate investing is the tax advantage that much of the IRS code provides to the owner/operator. High on the list of cocktail party chatter topics is the concept of COST SEGREGATION. It is a way to deconstruct the components of real estate developments, depreciate them faster than the normal life of a building and net the deductions against other income. To explain this concept, MITCHELL BALDRIDGE joins the podcast. The Texas-based CPA and CFP will take us through the ins and outs of Cost Segregation Studies and discuss the importance of solid bookkeeping and delegation for entrepreneurs and other business operators

Cost Segregation

-Describing the concept - accelerated depreciation and deductions-Potential benefits in numbers-Types of projects where it works (Who is it for?)-Process- getting study, dotting i's, building in documentation now and forward-Traps for the unwary- Sloppiness, Passive vs Active income, Full-Time Real Estate Occupation, -Recapture- what it is and how to manage it

Bookkeeping and Bulletproofing your Business for Future Sale

-Importance of dotting i's-Looking for tax savings-Delegating intensive work-Coordinating with advisors

https://www.betterbookkeeping.com/

How do we find you?

https://twitter.com/baldridgecpa

Links

https://www.recostseg.com/

https://baldridgefinancial.com/services/cost-segregation/

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

One of America's best (and most quotable) judges, Learned Hand said, "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

What happens when the IRS disagrees with the way you’ve arranged your affairs?

What do you do when you receive “fan mail” from the IRS (or the State Taxing authority)

KELLEY C. MILLER, ACTEC Fellow and Partner at Reed Smith in Washington DC. helps us understand the process of an IRS audit, good practices in dealing with an audit, and inside knowledge of how the process works at the agency.

This episode is full of good information on an uncomfortable, but vital, topic for families that are pursuing complicated planning that may catch the attention of the taxman.

Background and Good Conduct Rules of Thumb

Be Honest

Be Prompt

Be Complete

Be Clear/Organized

Be Consistent and coordinated with other tax and gov’t authorities

Be Quick to Alert the IRS if issues come up

What is the IRS / State looking for?

In a word, UNDERPAYMENT . . . or "more revenue."

Listed Transactions (ex. syndicated conservation easements)

Unreported income

Mischaracterization of gain vs income

Filing status (ex. Domicile / Residence - esp. at state level) and Dependents

Itemized deductions (Business vs Personal)

Eligibility for credits / treatment

Sources of “referrals”:

Data (Demographics, Internal Data, HNW, UHNW patterns, Social Media, AI in the future?)

News,

Spouses,

Other Agencies (Corporate Transparency Act Implications)

Past conduct

How is the IRS to deal with? Other states?

They are professional and sophisticated but under-resourced

Whom are they looking for?

Improvements? Potential new staffing and technological investments

Is not incorporating your advice team ever a good idea?

Civil vs. Criminal vs Collections Departments

Process

1) Open the Letter!  (Not a good time to stick your head in the sand)

Is it an audit or a request for additional information?

What person or entity is being audited?

What is the focus of the audit?

What documentation is being requested?

What kind of audit?

Correspondence Audit: The IRS requests additional information regarding a part of your tax return, such as receipts or canceled checks.

Office Audit: The IRS requests that you bring specific documentation into your local IRS office- the audit happens there.

Field Audit: An IRS agent shows up at your place of business to conduct a face-to-face audit.

Taxpayer Compliance Measurement Program Audit: The mother of all audits- one that requires full documentation down to birth certificates to test the Agency's scoring systems.

2) Notify the team and decide on the response strategy

Who is quarterbacking the response and the interaction?

Accountant / Attorney / Wealth Manager / COO

When should the tax preparer run things vs an attorney?

Do you need other expertise?

Should you have Attorney / Client Privilege? Very likely.

Who is compiling the information?

3) Responding to the request

You should respond to the IRS/State within 30 days of receipt

How should that occur?

Call / letter?

Crafting the response letter

Supplying the requested information

4) No Action or additional payment?

If it’s determined I owe more, what is the process of appeal?

What if I don’t have it?

Payment plans?

5) Closing the file

Documenting the outcome

Post-mortem –

What practices were audited?

Should we do anything different in tax planning

Any other storm clouds on the horizon?

Lessons Learned- Updating documentation and administration process going forward

How Do We Stay In Touch with Kelley?

KELLEY MILLER at REED SMITH

KELLEY MILLER on LINKEDIN

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

"Behavioral Finance" is all the rage.

BeFi (as the not-so-cool kids in the financial world call it) is the next phase in guiding individuals, teams, boards, companies, and leaders to better decision-making.

There is plenty of material telling us where people get it wrong. Even the best brains get deceived by a litany of behavioral biases. These biases cause people to fall off the track of economic rationality. However, even with all of these labels, there is little guidance on how to identify and use this context.

Until now . . .

PETER ATWATER argues in his new book "THE CONFIDENCE MAP" that there is a straight forward mental model.

https://www.amazon.com/Confidence-Map-Charting-Chaos-Clarity/dp/0593539559/

It can diagnose an individual's emotion and confidence, its directionality and its relationship to group and social mood.

Further, Peter asserts that people (and their advisors) can use this information to pull decision-makers out of the own limitations of their own silos.

People will be able to recognize what is occurring in their surroundings, mitigate risk and maximize opportunity. 

We'll discuss Peter's findings, the mental model he's developed and, finally, the process of writing the book. 

Outline

Quick background-

The Confidence Map- central tenet of the book

The context of one's place on the confidence map has as much to do with the decision making process as data and logic.

Rationale behind the book - what was the problem that you were seeing?

What was your research showing?

Examples

Johnson and Johnson Tylenol Case

Boeing 737 Dreamliner

Bud Light

Defining the axis-

Toggling between "Certainty and Control"

Toggling between "Confidence and vulnerability" (not price!  Are humans innumerate?)

Mapping human confidence (and using it in a forward looking manner)

Individuals and recognizing their own position in the chart

Leaders looking at group confidence and mood "at scale" to mark strategic shifts

Collective mood vs individual mood

Defining the group (which group is the individual following)

Recognizing where one is on the map personally vs the group vs the masses

Augmenting "behavioral finance"

Behavioral economics tries to give us the tools and bias catalogues of where human beings fall off the train of rationality

How do we think about the confidence map to help people predict (and avoid) their own frailties - especially around big decisions?

What is the "equipment" you need to use these tools effectively to help me to understand their decision contexts and make better decisions (potentially in times of maximum stress)? 

Is there a danger that this is giving a loaded gun to the financial services industrial complex?

What was the book writing process like?

Turning a box of ornaments into a Christmas Tree

Using a Coach

What were the struggles?

How do we stay in touch?

https://peteratwater.com/

Linkedin: Peter AtwaterTwitter: @peter_atwater

Amazon: THE CONFIDENCE MAP

https://www.amazon.com/Wealth-Actually-Intelligent-Decision-Making-1-ebook/dp/B07FPQJJQT/

The Corporate Transparency Act is legislation that is going to touch all high net worth clients in 2024.  This is like KYC procedures on steroids and investors need to be aware of it. Attorney, STEPHEN LISS helps us understand the scope of the developing new regime.

The financial reporting system currently makes it cumbersome for regulators and law enforcement to track the asset ownership and cash flows.  Lessons learned from the Panama Papers and Pandora Papers disclosures signaled the need for a change. 

Congress passed the CTA legislation in 2022 to combat money laundering, tax evasion and other illegalities.  After public input, final rules were recently promulgated. There are significant reporting responsibilities and criminal and financial penalties for non-compliance.

The impact of these initiatives takes hold in 2024- It’s becoming a point of emphasis for the legal, accounting and financial services communities.

It will be significant part of the estate planning process for HNW clients going forward.

With the expected “2026 avalanche of estate planning. Clients are in a for a surprising change in the standard procedures around standard techniques.

The concept of “Putting it in an LLC” or “putting it in a trust” is about to become more expensive, complicated and time-consuming- particularly in dealing with the law firms and especially financial institutions.

STEPHEN LISS is a partner at Dungey and Dougherty and is on the forefront of this legislation and its impact on clients. We’re going to talk about the scope of the CTA, it’s impact and why it’s important for HNW clients to start early and get ahead of these requirements when the planning avalanche comes.

Background

Congress enacted the Corporate Transparency Act (“CTA”) under the Fiscal Year 2021 National Defense Authorization Act on January 1, 2021.

The requirements of the CTA are being implemented “to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on reporting entities.” That said, even FinCEN acknowledges the enormous reporting burden imposed by the CTA, which it most recently estimated to be over 118 million hours in 2024, with an annual burden of over 18 million hours thereafter.

The CTA added 31 USC §5336 to the Bank Secrecy Act with the title, “Beneficial ownership information reporting requirements”. The CTA has three core elements:

Reports to FinCEN

The CTA requires certain entities (each a “reporting company”) to identify itself, its primary owners and officers (each a “beneficial owner”), and certain professionals who helped to form or register the reporting company (each a “company applicant”). The reporting company must then report to the Financial Crimes Enforcement Network (“FinCEN”) information sufficient to identify the reporting company, its beneficial owners, and any company applicants (“beneficial owner information” or “BOI”).

Control Access to Information

FinCEN will provide BOI to government regulatory and investigatory bodies, but it will not be made available to the general public. In addition, there are specific procedural requirements for government actors to access this information, along with civil and criminal penalties for improperly accessing or using such information.

Revised Due Diligence Requirements

The Secretary of the Treasury is required to revise Customer Due Diligence requirements for financial institutions to conform to the CTA, and account for the ability of financial institutions to access beneficial ownership information.

Outline

What is the Corporate Transparency Act?

The purpose of the Act is to

Set a clear federal standard for incorporation practices

Protect U.S. national security and commerce

Enhance national security, intelligence, and law enforcement efforts to combat money laundering, terrorism financing, and other illicit activities

Bring the U.S. into compliance with international anti-money laundering and countering of terrorism financing standards

The Act does not create a public registry of business entities in the U.S.

What Does the Corporate Transparency Act Require?

•A Reporting Company must disclose information about the entity itself, the Company Applicant, and its Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury

•For each Beneficial Owner or Company Applicant, the disclosure must include

•Full legal name and date of birth

•Each Beneficial Owner’s current residential address, and each Company Applicant’s current business address

•An identification number (such as a driver’s license or passport number) or FinCEN Identifier number (available upon request from FinCEN after providing name, address, and date of birth) and a digital copy of the identifying document

•Effective January 1, 2024

A REPORTING COMPANY must also disclose its:

•Full legal name

•Any “doing business as” names

•A complete current business address

•The State, Tribal, or  foreign jurisdiction of formation

•For a foreign reporting company, the State or Tribal jurisdiction where such company first registers

•The TIN of the reporting company or foreign equivalent if a foreign reporting company has not been issued a TIN by the IRS

FINCEN Identifier

•Provide the information that normally must shared with a Reporting Company and FinCEN will issue you an identifier number that can be provided to any Reporting Company.

•Any individual or entity with a FinCEN identifier must report to FinCEN within 30 days of any change in BOI or if they become aware or have reason to know any information was inaccurate.

•If a Reporting Company and an entity that owns it have the same beneficial owners, the Reporting Company can use the entity FinCEN identifier instead of disclosing BOI of the owners of that entity.

Protection of Beneficial Ownership Information

The CTA does not authorize public disclosure of BOI

FinCEN can disclose the information to:

•A Federal agency engaged in national security, intelligence, or law enforcement activity, for the use in furtherance of such activities;

•A State, local, or tribal law enforcement agency as part of a criminal or civil investigation, with court approval;

•A foreign government, to assist an investigation if a Federal agency requests the information;

•A financial institution with the consent of the reporting company, to facilitate compliance of the institution with customer due diligence; or

•A Federal regulator to determine compliance of a financial institution with their customer due diligence requirements.

Tax Adminsitration

Officers and employees of the Department of the Treasury can access “beneficial ownership information for tax administration purposes…” 5336(c)(5)(B)

Security Protocols

The protocols are intended to:

•Protect the security and confidentiality of any BOI;

•Require requesting agencies to establish, maintain, and abide by a secure system that would store BOI;

•Limit the scope of information sought, consistent with the purpose of seeking the information;

•Restrict access to BOI to those who have undergone appropriate training, and who are authorized to access the information; and

•Establish an auditable system of records to track each request, purpose of the request, name of requesting individual, and any disclosure of information.

•Proposed regulations were issued December 16, 2022.

Penalties for Government Misuse of Information

•Any individual guilty of unauthorized disclosure or use of Beneficial Owner information

•Is liable for a civil penalty of $500 per day the violation continues or is not remedied and

•If found criminally liable shall be fined no more than $250,000, or imprisoned for 5 years, or both or

•If violating another law of the United States or any illegal activity involving more than $100,000 over a 12-month period, the maximum criminal fine increases to $500,000 or 10 years imprisonment.

What Does the Corporate Transparency Act Require?

A Reporting Company must disclose information about the entity itself, the Company Applicant, and its Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury

Reporting Companies

•The Act defines a Reporting Company as:

•A corporation, LLC, or other similar entity that is

1.Created by filing a document with a secretary of state or a similar office under the law of a State or Indian Tribe; or

2.Formed under the law of a foreign country and registered to do business in the United States by the filing of a document with the secretary of state or a similar office under the laws of a State or Indian Tribe. 

•LPs, LLPs and business trusts (statutory trusts) are “similar” entities

•Trusts and general partnerships are excluded from this definition

Exemptions for Companies

•The Act excludes 23 types of entities from qualifying as a Reporting Company.

A “Large Operating Company”

•With 20 or more full time employees in the United States

•30 hours a week or 130 hours per month

•With gross receipts or sales as reported on a federal income tax return of over $5 million

•Must be U.S. sourced income

•With an operating presence at a physical office within the United States

501(c) tax exempt charitable organizations and foundations

527(e)(1) political organizations

4947(a)(1) and (2) charitable and split interest trusts

Publicly traded organizations

Domestic governmental authorities

Banks, credit unions, depository institutions, and money transmitting businesses

Broker dealers and RICs

Securities exchanges

Insurance companies

Public utilities

Public accounting firms registered under Section 102 of the Sarbanes-Oxley Act

Financial market utilities

...