Dear Small Business Community of Michigan,

I’ll start with an apology. I am delivering bad news today (12/24) with a subscript that the federal government deserves a lump of coal in their stocking this year.

The feds appealed their case to the 5th Circuit Court of Appeals and were successful in getting a stay on the injunction against enforcement of the Corporate Transparency Act. Translation: The Corporate Transparency Act (CTA) is back on and small businesses are once again required to report beneficial owners to the FinCEN (a part of the IRS) by December 31, 2024.

I have three messages for you…

1. We have a robust resource page dedicated to this issue where you can learn what the CTA is and what is required of you under this law. You will also find vetted partners to help you with your first filing which for most small businesses is due by December 31, 2024.
2. Intentional non-compliance with the law carries up to a 2-year felony penalty plus heavy fines. While we have been shouting about this requirement from the rooftops, we fear that most businesses do not even know this law exists. While there are some exemptions, generally speaking, if your business has 20 or fewer employees or $5 million or less in revenue, you probably have to file. Please visit our website and understand your obligations.
3. This is not the end of the story. SBAM has an active challenge against this law here in Michigan and there is at least a small chance that our case could produce a more limited injunction (just for our members who are the plaintiffs) before the end of the year. But with so few days left before the deadline, the risks of waiting to file are increasing. If you are confident in your ability to do so yourself, you can probably afford to wait a little longer. But if you are relying on someone else to do the filing for you, I’d recommend understanding what your real deadline is.

I am using urgent language here because non-compliance comes with such heavy and serious potential penalties. I am very concerned that literally millions of small businesses across the country do not know of this requirement and the IRS has done little to communicate about it. I cannot say that I expect that the IRS will immediately start hunting for violators with criminal prosecutions, but I do expect that late filers will pay fines. Civil penalties are up to $591 per day for each day of non-compliance.

By the way, if that $591 number seems odd to you, it is. The law set the max daily fine at $500, but gave the IRS the authority to adjust it by inflation. They increased it even before the law took effect. Like I said, they deserve a lump of coal in their stocking. But instead, we are committed to continuing our lawsuit against this violation of your 4th amendment rights.

As always, we are here to help.

Please visit the SBAM website to learn more and equip yourself with the resources needed to comply before December 31st.

Brian 

Federal Government Sends Lump of Coal to All Small Businesses with Reinstatement of Corporate Transparency Act

After the 5th Circuit Court of Appeals issued a stay on the injunction against enforcement of the Corporate Transparency Act, Small Business Association of Michigan President & CEO Brian Calley issued the following statement:

“The Corporate Transparency Act is a threatening, unconstitutional law that carries heavy fines and even criminal penalties for millions of unsuspecting small business owners. Now, just before Christmas, today’s court action is a gut punch to entrepreneurs who will have to quickly figure out how to navigate this vague compliance structure with just a week to go before the filing deadline. We have filed a lawsuit in the District Court for the Western District of Michigan on behalf of our members and small business owners everywhere.

“Politicians and bureaucrats say that this law was created to identify criminals, but what it really does is treat small business owners as if they are all criminals. Ironically, the IRS has done such a poor job of informing small business owners of their obligations under this new law that the law itself will create millions of unintentional offenders who are simply trying to run their businesses. We are continuing our lawsuit against this outrageous overreach and are appalled that small businesses are expected to take on this burden with so little time to comply with a deadline of December 31st, 2024.”

SBAM continues to provide updates to their members and small businesses statewide. You can read more about the Corporate Transparency Act and the resources being provided by visiting: https://www.sbam.org/navigating-the-corporate-transparency-act/ 

####