A federal law called the Corporate Transparency Act effective January 1, 2024, requires almost all U. S. companies to file a FinCEN Beneficial Owner Information report with the Financial Crimes Enforcement Network of the U. S. Treasury ...
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Your Company Must File a Report with FinCen or Be Fined $500/Day and more...

Your Company Must File a Report with FinCen or Be Fined $500/Day

A federal law called the Corporate Transparency Act effective January 1, 2024, requires almost all U.S. companies to file a FinCEN Beneficial Owner Information report with the Financial Crimes Enforcement Network of the U.S. Treasury (“FinCEN“) or the company can be fined $500 a day for a late report.  Companies formed before 2024 must file no later than December 31, 2024.  Companies formed in 2024 must file within 90 days of their formation date.

My son and I own a company called FinCEN Filer, LLC, that files FinCEN BOI reports.  To learn more about the Corporate Transparency Act read How to Avoid the $500/Day Fine and articles and blog posts on FinCEN Filer’s website. Watch these FinCEN Filer videos: 1. What Info Must be Reported, 2. Definition of Beneficial Owner, 3. What Beneficial Owner Information is in a FinCEN BOI Report, 4. Alert: Legal Consequences of Filing a False FinCEN Report, and 5. Our FinCEN BOI Report Services.

How to Hire FinCEN Filer to File a FinCEN BOI Report

Go to https://fincenfiler.com/services

Warning: If you are an owner of a U.S. company you need to be aware of the due date of your company’s FinCEN BOI report.  Reports are due:

  • December 31, 2024, for companies created before 2024.
  • 90 days after the company was formed if it is formed in 2024.
  • 30 days after the company was formed if it was formed after 2024.

How the CTA Affects Your Entity

Here is a brief summary of the CTA:

  • Almost ALL existing companies and companies formed in the future are or will be reporting companies that must report the required information to FinCEN.  See the definition of required information.
  • A beneficial owner is an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity, or (ii) owns or controls not less than 25 percent of the ownership interests of the entity.  See the definition of beneficial owner.
  • The following is the required information about each beneficial owner and applicant that the reporting company must report to FinCEN: (i) full legal name, (ii) date of birth, (iii) current, as of the date on which the report is delivered to FinCEN, residential address, and (iv) the unique identifying number from the beneficial owner’s or applicant’s acceptable identification document or the beneficial owner’s or applicant’s FinCEN identifier number.  See the definition of required information.
  • A reporting company that violates the CTA shall be liable to the United States for a civil penalty of up to $500 for each day that the violation continues or has not been remedied; and may be fined not more than $10,000, imprisoned for not more than 2 years, or both.

Subscribe to Our Free CTA Newsletter

To stay up to date on the CTA, its regulations, and how to file a CTA FinCEN report get a free subscription to our CTA newsletter.

The post Your Company Must File a Report with FinCen or Be Fined $500/Day appeared first on Arizona LLC Law.

   

Don’t Pay LegalZoom More than an Arizona LLC Attorney to Form an Arizona LLC

Question: People frequently ask me why they should hire me, Richard Keyt, an Arizona LLC attorney who has formed 9,000+ AZ LLCs, to form their Arizona limited liability company instead of LegalZoom?

Answer: People should hire me to form their AZ LLC instead of LegalZoom for the following reasons:

  • We file the new company’s FinCEN Beneficial Owner Information report required by the Corporate Transparency Act for our Silver and Gold LLC formation packages.  If your new company does not file this report within 90 days of its formation date the U.S. Treasury can fine the company $500 a day for each day the report is late.  See FinCEN Filer, LLC to learn more about this law.  Companies formed before 2024 must file their report on or before December 31, 2024.  LegalZoom charges an additional $99 to file this report.
  • I’m $372 Cheaper than LegalZoom for Similar Services: As of 2/24/24 LegalZoom’s premium LLC formation package is $582, but it includes an attorney fee of $49/month for a year, which is an additional $588/year.  FinCEN BOI report filing fee is $99.  The total LLC premium formation fee for the first year is $1,269, which is $372 more than my $897 Silver LLC package which includes filing the FinCEN BOI report.
  • Our annual statutory agent (aka Registered Agent) fee is $99.  LegalZoom’s annual statutory agent Service is $199/year.
  • I’ve Got 354 Five Star Reviews: Read our 354 happy client five-star reviews on Google, Facebook & Birdeye.  When I Google LegalZoom it doesn’t display any reviews.
  • I’m an Arizona LLC Attorney who has been forming LLCs since 1992: I formed the first LLC in Arizona the day Arizona’s LLC law became effective in October of 1992. I have formed 9,000+ Arizona LLCs since I started counting in 2002.

  • I do not disclaim responsibility for my services: I don’t require my clients to agree to disclaimers like the following found in bold text in LezalZoom’s “Terms of Service Agreement“:

“I understand and agree that LegalZoom is not a law firm or an attorney, may not perform services performed by an attorney, and its forms or templates are not a substitute for the advice or services of an attorney. Rather, I am representing myself in this legal matter.”

Why would you hire a company that tells you it is “not a substitute for the advice or services of an attorney.”  Isn’t LegalZoom advising people to hire an attorney to form their LLC?  That language should cause people to run away, run away, and hire an LLC attorney to form their LLC.

  • I Answer Arizona LLC Questions for Free: My son Arizona LLC attorney and former CPA Richard C. Keyt (480-664-7472) and I (480-664-7478) answer LLC questions for free.  I don’t know if LegalZoom has LLC attorneys who answer LLC questions, but if it does, do you really want a nameless LegalZoom sales rep with unknown AZ LLC experience to answer Arizona LLC questions?

See the contents and prices of our three LLC packages.

Hire LLC Attorney Richard Keyt to Form an LLC

To hire Richard take five minutes and complete our online LLC Formation Questionnaire.

Compare the LLC Formation Services of the Keyts vs. LegalZoom

LLC Formation Service as of 5/14/23KEYTLawLegalZoom
LLC Formation Service as of 5/14/23KEYTLawLegalZoom

LLC Formation package

Silver

Premium

Base LLC formation package fee

$797

$497

Fee to file the Articles of Organization with the Arizona Corporation Commission on an expedited basis

included

$85

Operating Agreement & getting the LLC's Employer ID Number (EIN) from the IRS

includedincluded

Statutory agent service for the first year. Arizona LLC law requires all AZ LLCs have a statutory agent.

included

$249

Total cost to form an AZ LLC with above formation services

$797

$831

Additional cost to use LegalZoom instead of KEYTLaw

$34

Annual statutory agent fee after 1st year.

$99

$249

Unlimited phone calls with an AZ LLC attorney who has formed 9,000+ LLCs to answer your LLC questions for free

no

Name selection advice from an AZ LLC attorney

no

Confirm LLC's name with Arizona Corporation Commission (ACC)

When Will the LLC be Approved by the Arizona Corporation Commission

day we are hired and paid7 - 9 business days after being hired!!!!

Email a pdf copy of the Articles of Organization approved by the Arizona Corporation Commission

day we are hired and paid?

Attorney prepared 35 page custom Operating Agreement written for a single member or husband and wife owned LLC

one size fits all

Attorney prepared 55 page custom Operating Agreement written for a multi-member LLC

one size fits all

Experience of the person who prepares the Operating Agreement

Richard Keyt has prepared 9,000+ Operating Agreements?

Members get the Arizona LLC Operations Manual, a 170 page book written by an Arizona LLC attorney who has formed 9,000+ AZ LLCs.

no

Members get 50 post LLC formation email alerts reminding them to complete various tasks

no

Members get Arizona LLC attorney Richard Keyt's free 83 question do-it-yourself comprehensive LLC legal audit

no

In addition to hard copies of all LLC documents members get digital pdf copies of the documents.

no

The Operating Agreement can be digitally signed using DocuSign.

no

Checklist of 34 tasks that the LLC must accomplish in the first 75 days after formation and the deadline for performing each task

no

Membership certificates for each member

Worthless, but cool looking seal that has no legal significance under AZ LLC law that misleads people into thinking it has value

no

LLC portfolio that contains paper copies of the LLC's formation documents organized behind tabs

How to Hire Richard Keyt to Form Your Arizona LLC

To hire Arizona LLC attorney Richard Keyt (9,000+ LLCs formed) to form your LLC select one of the following options. Your LLC will be formed and can open its bank account the same day or the next business day after we are hired. See the “Contents of the Bronze ($497), Silver ($797) & Gold ($1,297) LLC Packages.

Option 1: Quickest, Easiest & Most Popular – Telephone (Mon – Fri 8 am – 5 pm). Call and give your information to:

Option 2: Online – Available 24/7

Call Us if You Have any Questions

Call Arizona LLC attorneys Richard C. Keyt (480-664-7472) or his father Richard Keyt (480-664-7478) if you have any questions about forming or operating an Arizona limited liability company. They don’t charge to answer questions over the phone.

For People Who Want to Form an LLC Themselves

If you think you might want to create a do-it-yourself Arizona LLC you must read Arizona LLC attorney Richard Keyt’s article called “Step by Step Guide: How to Form Arizona LLC 2024 in (6 Easy Steps).”

The post Don’t Pay LegalZoom More than an Arizona LLC Attorney to Form an Arizona LLC appeared first on Arizona LLC Law.

   

Federal District Court Rules Corporate Transparency Act Unconstitutional

The following is a March 4, 2024, news item on FinCEN’s website:

On March 1, 2024, in the case of National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), a federal district court in the Northern District of Alabama, Northeastern Division, entered a final declaratory judgment, concluding that the Corporate Transparency Act exceeds the Constitution’s limits on Congress’s power and enjoining the Department of the Treasury and FinCEN from enforcing the Corporate Transparency Act against the plaintiffs. 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.

Wolters Kluwer’s March 5, 2024, article states:

“the court’s ruling prohibits CTA enforcement only against the NSBA itself and all of its members. . . . Many believe that all reporting companies facing CTA deadlines should seriously consider filing , , . Businesses that fail to file in time to meet their CTA deadlines are betting on the NSBA prevailing in the courts. Meanwhile, if the UST prevails, these businesses will potentially face significant civil fines, interest, and penalties, as well as possible criminal penalties, including jail time. 

The law firm of Akin Gump wrote an article on the case and said:

“The court’s injunction is limited to the plaintiffs in the case (i.e., the individual plaintiff and the NSBA). It is unclear at this point if the injunction will be understood to apply to all of the approximately 65,000 individual members of the NSBA or only to the association.”

The Katten law firm’s article states:

“Note that the case was decided on summary judgment at the federal district court level and that the language from the final judgment specifically relates solely to the plaintiffs in this case (i.e., the National Small Business Association (NSBA) and a specific business owner who is a member of the NSBA). . . . At this time, we believe it remains prudent practice for clients to continue to abide by the reporting requirements set forth under the CTA until additional guidance becomes available.

Baker Hostetler law firm’s March 5, 2024, article says:

“The relief from this ruling currently applies only to the named plaintiffs, which include the members of the National Small Business Association (NSBA).  The immediate impact of this ruling on all other companies is unclear. However, companies that were not party to the suit may not rely on this decision to avoid complying with the CTA, absent new guidance from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) permitting them to do so. . . . As of now, this ruling technically applies only to the 65,000 members of the NSBA. In other words, no other company may rely on this decision to avoid complying with the CTA, absent new guidance from FinCEN permitting them to do so.”

FinCEN Filer, LLC’s advice as a result of this case is:

  • Companies formed before 2024: Hold off until November or December of 2024 to see what happens.  If the courts find reporting companies do not have to file a FinCEN BOI report then none of the pre-2024 companies needs to file.  If the courts find that the CTA is constitutional and the law applies to all reporting companies then file the FinCEN BOI report before December 31, 2024.  If there is no resolution of this issue before December 31, 2024, then file the FinCEN BOI report on or before December 31, 2024, so you eliminate the possibility of a $500 a day late filing fine.
  • Companies formed in 2024:  File the FinCEN BOI report within 90 days of formation unless there is a final ruling that the CTA is unconstitutional and companies do not have to file a FinCEN BOI report before the expiration of the 90 period.

The post Federal District Court Rules Corporate Transparency Act Unconstitutional appeared first on Arizona LLC Law.

   

Loan Can’t be Called if Land Is Transferred to an LLC

Question:  Can my lender call my loan that encumbers my land if I transfer the land to an LLC I own?

Answer:  Probably not.  The Federal National Mortgage Association, aka Fannie Mae, has something called Servicing Freddie Mac Mortgages Series 8000.  Section 8406.4(b) Additional permitted Transfers of Ownership Effective 10/20/2021 states:

“Permitted Transfers of Ownership subject to conditions.  In situations where all of the following conditions are met, Freddie Mac will permit a Transfer of Ownership of the Mortgaged Premises:

  • At least 12 months have passed since the Origination Date and
  • The transfer is to a limited liability company (LLC) or limited partnership (LP), provided that:

The managing member/general partner of the LLC/LP is the original Borrower. If there are multiple Borrowers, all of them must be members/partners of the LLC/LP, and at least one of them must be a managing member/general partner. If the transfer results in a permitted change of occupancy type to an investment property, such change must not violate the Security Instrument (e.g., the 12-month occupancy requirement for a Primary Residence), and

The Servicer notifies the original owner or natural person that the Mortgaged Premises transferred to an LLC/LP must be transferred back to the original owner or natural person prior to any subsequent refinance or modification application to meet Freddie Mac’s underwriting requirements

Fannie Mae ruling D1-4.1-02: Allowable Exemptions Due to the Type of Transfer (04/13/2022) says due on sale clauses cannot be enforced if the borrower transfers the encumbered land to a limited liability company.  The rule states:

“the servicer must process the following exempt transactions without reviewing or approving the terms of the transfer: . . . A transfer of the property (or, if the borrower is an inter vivos revocable trust, a transfer of a beneficial interest in the trust) to a limited liability company (LLC), provided that

  • the mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, and
  • the LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).”

Bottom line is Fannie Mae approves transfers of encumbered land without the lender being able to enforce a due on sale clause.

The post Loan Can’t be Called if Land Is Transferred to an LLC appeared first on Arizona LLC Law.

   

Did Your File My LLC as a Partnership?

Question:  Did you file my LLC as partnership? My tax accountant needs this information and a copy of that document.

Answer:  You need to get a new accountant who understands LLCs and federal income tax law. It is not possible in any state to file an entity (corp or LLC) as a partnership for federal income tax purposes. The IRS’ default tax method for a multi-member LLC like your two member LLC is partnership. No need to file any papers with the IRS other than the LLC’s IRS form 1065, which is its partnership tax return. If the LLC wants to be taxed as an S corp it has to file an IRS form 2553. If your LLC did not file IRS form 2553 then it is automatically taxed as a partnership.

The post Did Your File My LLC as a Partnership? appeared first on Arizona LLC Law.

   

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