Thriving in the future demands a game plan, and FinCEN reporting is the playbook. Today, our special guest Bob Bluhm will talk about the FinCEN reporting playbook and why it is important to protect your assets. Bob presents “The 2024 Game Plan,” a guide to navigating the real estate market, where he provides thorough information on trends, opportunities, and challenges for the upcoming year. He highlights the new FinCEN reporting requirements, guiding listeners through its step-by-step process, and explaining how to protect your assets in compliance with the latest regulations. Bob also touches on asset defense strategies and addresses common questions and concerns of real estate investors. Tune in now and learn to decode the Corporate Transparency Act!

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Decoding The Corporate Transparency Act

This episode rocks. There’s a brand new Federal Law called the Corporate Transparency Act or the CTA. I’ve got my guest, Bob Bluhm of Asset Defense Team, and he’s going to walk us through how to complete 5 to 10 minutes of an application. There’s even a tutorial. Every single one of us has to register our entities, INCs, LLCs, and among others. Read, enjoy, take notes, and we’re going to use his tour to learn how to complete this as part of our tutorials and all your resources. I will see you on the inside.

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In this episode, we have just, as I said in the intro, a spectacular guest. This is literally the pointy edge of the sword. I’ve got Bob Bluhm with me, and he is a legal defense for businesses. I met him through my Family Mastermind and attended an event where he spoke about the CTA, the Corporate Transparency Act. That is our subject for this episode.

I’ve been talking about it for the last couple of weeks in socials about this event. We’re going to be talking specifically about a Q&A and deep dive into what is the Corporate Transparency Act, what does it mean, and what are the penalties because they are pulling out the stops on penalties, and how do you file? Prepare yourselves for a tutorial. Welcome,  Bob. I’m glad you could be here with me.

Thank you, Merrill. I’m happy to be here and you’re right, this is going to be a workshop, if you will. We’re going to do how to file this particular report. Before we go there, I want to thank you for having me on. We did meet at the Family Mastermind, but we also met at the Leadership Boardroom, if you happen to remember that.

That’s right. I had so much fun at that event. Now, please introduce yourself. My crew already knows that I let everybody introduce themselves but this man, I told him to bring this presentation he trained me on to bring it to you, which is what he’s going to do. Give us a little background. Bob, why you?

I wonder that too, why me? I don’t know, but I’m an attorney and have been for a lot of years. I’m based in Dallas, Texas. I’m what is called an asset protection attorney, but started out as a trial lawyer. I was in court, to know my way around the courtroom very well. To switch sides many years ago because I found that suing people and taking money from them was a whole lot less satisfying than keeping people from the community.

I can imagine.

That’s what I do now. I protect people’s assets through trusts and limited partnerships in limited liability companies, and corporations. We read their contracts, the full gamut of legal work. If we can dive right into.

I want to. Folks, prepare for what is to come because this is amazing. I’m so excited for him to share this with you guys. Take it away, good sir.

That’s what we’ll do. This is going to be an introduction to – what is called the Corporate Transparency Act. sometimes referred to by its acronym the CTA. What is the Corporate Transparency Act? It is part of a larger bill that was passed with bipartisan support, unfortunately, in 2021 and it is now law as effective as of, I should say, January 1st of 20224.

Who’s going to run this thing? It’s part of a division within the Treasury Department called FinCEN. That stands for the Financial Crimes Enforcement Network. That’s a lot of scary stuff. Nobody here is committing a financial crime and yet, we’re being monitored by the Financial Crimes Enforcement Network or it’s acronym, FinCEN.

The law is now in effect and it applies to both brand new entities as of January 1st, 2024. Also, existing entities that existed prior to January 21st, 2024. That’s the dividing line, is what happened before January 1st or what happened after January 1st, and you’re going to see that is a very important date. Why do we have this law? The idea behind it, which quite frankly, I don’t think is going to be very effective.

This law is not going to be effective. It’s trying to determine who owns and benefits from these corporations and entities that people set up. In other words, they’re trying to get at who is what is called the beneficial owner. The reason is they do not want assorted bad guys like drug dealers, sex traffickers, terrorists, and other money launderers hiding behind shell corporations and concealing their activity, their illegal activities, because the federal government doesn’t know who they are and what this corporation is supposed to be doing. This law was passed to require all kinds of entities to file with the federal government this report revealing all kinds of very personal information.

 

I want to jump in there, Bob, because this is, for our tribe, another reason. This was backed by the bank. The bank lobbies were huge in their contribution and pushing for the CTA because we’ve discussed all of the social media,  all the training that I do and all the learnings that I provide. Lender’s greatest loss in business lending is to stolen identities added to a brand new company.

The beneficial owner appears to be this fake ID that was stolen. If a loan or credit cards are obtained, that’s one way in which losses occur for the banks. Part of this why, is beneficial ownership and as we do in our SmartCo and QFE strategies guys, we clean up all the databases and make sure that the identities sync up with us. That’s why we’re getting such high funding amounts. I wanted to add that to the why fundability. The banks want to know who has a beneficial interest in this company or in a particular particular company in your QFE.

That’s a very important background for people to understand. The banks could have required this information if they were going to make a loan to somebody, but instead, they didn’t want to do the work so they pushed it off on all the small business owners. That’s neither here nor there. Here are the reports and this is key to understanding. Jot this down, if you will. Brand new entities created as of January 1st, 2024 have only 90 days in which to file this report.

That is 90 days from the date of creation of the entity. Existing entities that existed prior to January 1st, 2024 have a full year in which to file. A lot of people may be thinking, “I dodged a bullet. I got a whole year.” Don’t think that way. Get your report done early rather than waiting because once again, it’s easy to forget about this then you’re scrambling at the end of the year when everything else is busy.

Once again, it's easy to forget about this, and then you're scrambling at the end of the year when everything else is busy. Click To Tweet

Get the report in now, so it’s done. These are key dates, before January 1st or after January 1st. The penalties for failing to file are very severe. There are civil penalties if you forgot or you didn’t get it in on time. That’s a civil penalty. It’s an, “Oops, sorry. We’re going to fine you $500 per day that you should have reported after the 90 days.” If it goes on for five days, you get a $2,500 fine. By the way, there’s no cap.

This could bankrupt people and impair your ability to repay loans and meet any other financial obligations. Now, if somebody is going to take the attitude of, “I’m not going to file. I refuse to file for some ideological reason.” The problem is, that is a willful violation of the law. Now, for willful non-compliance, they can fine you $10,000 and put you in jail for two years. They’re serious about this and we should be serious about it.

One of the things I love about this, Bob, is how they got the gangsters back in the ‘30s for tax evasion. This is a great way to be able to sew somebody up if they didn’t file and put them away for something that otherwise there’s no intentional malfeasance here. It’s just a willful non-compliance that means they can put somebody away.

Pay attention, folks. This is no joke and we’re going to get into the fundability aspects as we get deeper into this. Keep reading because he’s going to give a tutorial step-by-step how to complete it. It’s a very simple filing. That’s why they’re being so heavy -handed with the penalties because it doesn’t take you two hours to finish this. It’s moments, but you’ve got to file. We’re going to be using this for our tutorial for you folks. Continue, Bob.

Who’s got a file? There are three possible persons who must file our entities. One is the reporting company. In other words, if you have an LLC, a corporation, a limited partnership or even a business trust. That is any entity that was created by filing a document with a Secretary of State or an equivalent of a Secretary of State.

In Arizona, we don’t have a Secretary of State. We have the Arizona Corporation Commissions, which serves the same purpose. There may be Native American tribes, which you would have filed and that qualifies as a Secretary of State. Any entity that is created as a result of filing a document and has to have official government approval or some level of government approval. That is a reporting company.

People will say what’s not a reporting company, and for example, a trust. Most trusts are not going to be reporting companies. There are some trusts that are created by filing with the Secretary of State such as various business trusts. Aside from those of the vast majority of trusts such as living trusts and irrevocable life insurance trusts. These are not filed with a Secretary of State and therefore, they are not filed with a Secretary of State. Therefore, they are not reporting companies. They’re not companies at all.

The vast majority of what most of us have will be a reporting company, and we’re going to have to include that information. Now, I’ll show you what that information is. The second person that has to file is the company applicant. I’ll give you an example. Merrill, if you went to a lawyer and said, “Would you create an LLC for me?” You would be a company applicant because you directed the lawyer to and the lawyer who then filed with the Secretary of State became the organizer of the LLC.

They are also company applicants. Both of those folks would need to file as well. The big issue is who’s a beneficial owner? This is where there are a lot of unanswered questions but to create a gloss, a very general answer, a beneficial owner is one of two things. If you own 25% or more of stock in a company or a partnership interest in a limited partnership or a membership interest in an LLC, you are a beneficial owner.

What if somebody is going to try to get a little cute with this and think, “I’m just going to own 24% so I don’t have to report.” A problem is the second test will capture you and require you to report. That is anybody who has what is called Substantial control. In an LLC, that would be a manager. The manager doesn’t have to be a member of the LLC. In that case, if they’re a manager, they have substantial control, a president of a corporation, vice president, secretary, and treasurer of the corporation has substantial control. A director of a corporation, a general partner, and a limited partnership has substantial control. You can see that this is a pretty broad category, whether somebody owns 25% or not.

The manager doesn't have to actually be a member of the LLC. Click To Tweet

I would like to add for our tribe, folks, once again, how many times do our smart codes and our QFEs are designed to have sole ownership. You will file this for your LLC, but notice 25% is a banker’s requirement. Just throwing in where their influence is. The banker’s requirement is that anybody has to be on an application who owns 25% or more. That is vital for us to understand in the CTA that the banks are looking for beneficial ownership of somebody who would need to be also on a credit application. We want sole ownership of our entities so that nobody else has to be on this and spouses have their own QFE or smart code. Bob, brilliant. Thank you.

One other thing I should mention is if someone has what is called a member-managed LLC. All of the members are managers and have substantial control regardless of whether they own 25% or not. This is a tricky area as to who is a beneficial owner. The bottom line is because the penalties are so severe, if you have any question about, “Am I a beneficial owner? Maybe I’m not. Maybe I am.” File as a beneficial owner.

Especially since it’s not hard and it’s not open. Everybody can’t see this database. It is still relatively private.

It is, and the government already knows more about you than your mother knows.

The government already knows more about you than your mother. Click To Tweet

Also LexisNexis and the business credit bureaus. We’re already hit.

We would all report our income to the IRS every year. The government already knows. Anyway, there are some companies that are exempt. There is a list of 23 exemptions and there are mind numbing definitions of what every one of these are. To give you an example of what is in their view a large operating company. A stripped down definition, if you will.It’s a company that has twenty or more employees in the US. If you’ve got a bunch of employees in the Philippines or offshore somewhere, it doesn’t count.

You don’t qualify.

These have to be US employees. Previous tax return had to show more than $5 million in gross sales or receipts. These are and, not or. You must also operate from an owned or leased physical office in the US. You can’t be running your business out of your home or shared space like a WeWork space. You got to have a real business. It’s what they’re looking for. If you have what is called a large operating company under the statute, you do not have to file the BOI report.

The vast majority of small businesses are not going to be able to meet this requirement and we’ll have to file. Who’s a beneficial owner? We talked about that, 25% or more ownership or you exercise substantial control. Maybe it’s a better way to define who’s not a beneficial owner? That would be a minor. Someone under eighteen, an agent or a nominee of a company who’s merely a representative of the company but doesn’t have any real control.

An employee of a company, even though they may be in an important position within the company. If they’re just an employee receiving a salary, they’re not a beneficial owner. An individual who inherits maybe some stock in a company, they’re not a beneficial owner. A creditor of the reporting company is not a beneficial owner unless the creditor meets the definition of a beneficial owner. We’ll go over roughly what that could be. A lender will not be a beneficial owner.

What’s going to qualify as being a beneficial owner? I told you, this is where it gets confusing and sticky. I’ll go through these various categories with you, company equity. This is an obvious one. If anybody owns stock membership interests or limited partners interests or some other form of beneficial interest in a company or an LLC or a limited partnership. You are a beneficial owner.

Even if you’re under 25% but you are a member in it?

No, you’d have to have that 25% threshold to own the company entity in order to qualify as a beneficial owner under this particular test. Remember, there’s another potential ownership test. What about indirect ownership? Let’s say, you own the blue circle, the holding LLC, but the reporting company is a company that owns your rental property. That rental property LLC is owned 100% by the holding LLC. Who is the beneficial owner because you own the holding LLC, which in turn owns the reporting company? You are still the beneficial owner. I hope that was clear.

Very clear. Even if you own instead of that 100%, if that said 25% of that rental company, then the holding company is still a beneficial owner. Therefore, you as the owner must file but 24% or lower, not necessarily filing for the rental property LLC. Correct?

Yes, unless you meet other beneficial owner and you have substantial control. In this case, you would.  Someone who’s receiving profit from the company could be a beneficial owner. In other words, you don’t have an equity interest. You don’t own 25% or even 20% or any percent. You have no equity ownership at all.

Nevertheless, you have a side agreement that says you’re going to receive some of the profits of the venture. That could be a joint venture agreement that says so, a profit sharing agreement or any other contractual agreement which shows that you’re supposed to receive income from this property or this venture even though you’re not a shareholder.

I want to drill down a little tighter there. The joint venture agreement does not represent a JV where you are selling something in your company. If you’re doing real estate and you do a profit share of a deal. That does not qualify as a beneficial ownership of the company. It’s literally just you made a deal and you’re splitting the profits of a particular property or venture within that company. If you have a profit share of the company, now you are a beneficial owner.

Let people ruminate on that for a little while because this is going to get a little complicated. Company options, you might have an agreement or a contract that allows you to buy an interest in the company at a certain point in the future or when certain targets are met. That could be giving you beneficial ownership.

If you’re a trader in stock, stocks or options, you have puts or calls or straddles, then you can be a beneficial owner as well. You’ll have to think that through. Convertible interest,  this is where a creditor could be a beneficial  owner. That is when a creditor has the right to convert maybe a debt interest or a loan interest into an equity interest.

If you're a trader in stocks or options, and you have puts or calls or straddles, then you can be a beneficial owner as well. Click To Tweet

That’s convertible interest which means you can be a beneficial owner in that instance. You can tell we’re getting pretty far out on the limb here trying to cover all these different situations because this is what people are going to run into. Probably not the vast majority, but somebody may find themselves in that category. What if you have a trust and your trust owns the beneficial interest in a company, then you are a beneficial owner. In other words, you have a trust and the trust is the owner of the LLC. Now you are the beneficial owner. You have a beneficial interest and must report.

I love this. Everything else we didn’t think to specify also.

That’s right. That’s you. Once again, the better rule of thumb is if you can’t figure it out, you’re not willing to spend hours or hire a lawyer to figure it out. Go ahead and file anyway. As a beneficial owner, it’ll keep you out of trouble. Maybe you didn’t even have to file. One of the features of this filing is you don’t have to say why you’re a beneficial owner. You don’t have to say, “I’m a beneficial owner because I own 25% or because I have substantial control.” You don’t have to specify that you just file.

We’ll see when you fill it out, you’re not outing yourself of what beneficial interest you have. You’re literally just saying, “Me too.”

That’s right. That’s correct. We talked about the first of those beneficial owner tests. You have 25% or more ownership. Let’s say you don’t have ownership or 25%. This is the second test and that is, do you have substantial control? What is considered substantial control? It’s not very well defined as you can tell but this is what we do know. If you’re a senior officer of a company, regardless of whether you’re a secretary, a treasurer, a vice president or a president, you have substantial control.

Directors as well for INCs.

If you have a member-managed LLC, all of the members now have substantial control because they all share in the management of the LLC. If somebody has authority to appoint or remove a senior officer, that would be a director by the way or a majority or dominant minority of the board of directors. Once again, you have substantial control. If anybody has the ability to direct or determine or decide over important matters affecting the company,that’s a catch-all provision. You have substantial control.

File rather than not file.

Who does not have substantial control? Once again, it’s employees or other people within the company who just receive a salary even though they can make some decisions. How are we going to file this BOI report?   If you look at the URL, it’s www.FinCEN.gov/boi and that stands for Beneficial Ownership Information.

I’m going to go to this website and we’re going to fill this out. We’re going to work on this and you’ll see how we do it. We’re going to go to file and we’re going to file a report using the filing system that the government has created. Over to the left, it says, “Do you need to file a BOIR?” Which is the Beneficial Owner Information Report.

There are two ways you can do it. Frankly, I haven’t been able to get this first one to work. It’s still a glitch in the system. If you want, you can prepare a PDF and leave it and come back to it. When the PDF is completed, you can then upload it and submit it as your report. You may not have all of the information that you need. The first option then would be your better approach.

If you have all the information like EINs and everything I’m going to show you, you can go ahead and click the second box.

This is the one we’re going to do. At the end of it, you would end up just submitting it and you’re done. You can’t go back and save anything. You’d have to start all over again if you’re starting on this second one. Here we go. We’re filing the report and the first thing they want to know is what type of filing is this. The good news is if it’s an initial report, we’re not going to do this every year. We file once for a corporation or LLC or partnership. There are other reports you may have to file.

If it goes defunct and we reactivate it, do we have to refile or is it like an EIN it’s just attached to that entity?

I don’t know the answer to that and I’m not sure finCEN even thought that through but it was reactivated. Let me give you a scenario, let’s say, you had an entity but it went dormant before January 1st, 2024. You reactivated it after January 1st, 2024. I would consider in order to stay safe to consider a brand new entity as of January 1st, 2024 and you have 90 days in which to file this report rather than a full year.

I would think that would be the safer way to do it. What are some of these other reports? If you had some erroneous information, which you made a mistake. You would then correct the prior report, that’s B. Let’s say you have 2 or 3 members in an LLC, or it could be even one member of an LLC starting out, but now you want to add somebody or somebody wants to drop out of the LLC. You have to update the prior report.

In other words, they’re trying to make it. Merrill and I can’t just form this nice company together. We report ourselves then we want to bring a money launderer into the LLC. We’d have to report. You can imagine how bad guys are going to try to think of getting around this. They’re going to think, “We’ll bring the drug dealer in later.” You’d have to update the prior report. What if you have a newly exempt entity? I’m not quite sure what that would be.

I had $4 million in revenues and 20 employees but in 2024, I did $5 million. Now I qualify. I’m exempt. We just moved into a warehouse instead of everybody working at home.

You had nineteen employees and $5 million revenues and you had to share an office space but you added the 20th employee so now you’re exempted.

We’re exempt.

All the crazy scenarios. They just want to know what type of report is this? This is going to be the initial report. This is the report most of us are going to be filing. We now click the next button and now we don’t need to do number 3 or 4. Number three allows you to get what is called a FinCEN ID. If you’ve got a lot of entities and you’re going to be filing a lot such as we do.

Our company forms entities as a core part of our business. We create thousands of entities every year. We’re going to have to file a lot of these. All of our paralegals have gotten a FinCEN ID, which gives you a number and you can now plug it in. It saves you from having to fill in a whole bunch of information because they’ve already got them.

This is the individual who’s filing not a FinCEN ID for the entity itself.

That is correct. This is the company applicant.

Organizers have to also file and we do shelf companies. I need to have my team get a FinCEN ID for me,  then as you said, we put that ID in and it saves us time.

You’re going to see where that does save us a lot of time that’s coming up. In number five, we have to type in the name of the reporting company. This could be Merrill Chandler LLC. If you have a trade name, a DBA doing business as a fictitious name that you’ve registered, then you would include that in line six. One of the good things about this website is they will have a little dropdown box or an explanation for every one of these if you put the cursor over the particular box. It’ll tell you what they’re looking for.

 

Belts and suspenders, folks. Get Fundable is not a registered DBA. We are Fundability, Inc but we’re doing business. We’re marketing as Get Fundable website, GetFundable.com. I’m going to ask our tribe to include even unregistered DBA in there for belts and suspenders. If somebody’s looking at you, especially a lender is looking at your DBA registered or not, and they ping the CTA. We don’t want them seeing a no there. We want them seeing what you’re doing in the marketplace as part of the filing.

Very good point. Now, we’re going to identify this reporting company and there are three different ways you could use the EIN for the company, which is the taxpayer identification number or if you’re using a company, you’re essentially using your social security number. You could include that if the entity doesn’t have an EIN. An ITIN is for a non-resident of the US. The ITIN is for a non-resident of the US an individual taxpayer identification number, which is the equivalent of a social security number for someone who doesn’t have a social security number.

Foreign is another category, which is not going to apply to most people here, but you can read about it. If it happened to be a foreign ID, then you would have to select the particular country. Once again, there’s a drop down, but this is inactive in this particular filing. If you had filled out number eight, then number nine would open up. Let’s say we have Merrill Chandler, LLC. That’s a made up company for now, but we filed it in.

I own Merrill Chandler, LLC, so there’s that.

I didn’t know that but assuming you filed it in the US. You would click United States of America. I’m making all this up. Let’s say you filed it in Alabama.

Curbs and tie, is that Alabama?

Yes, it is.

I don’t even know.

If you happen to create it under a tribal jurisdiction, you would fill in C and D, but most people are not going to do that. What is the address of Merrill Chandler, LLC and you need to give the actual principal place of business address. You can tell it’s required. Once again, if you want to know what do they want to know, the dropdown will give you more information. We want the street address, the city, state, county, and also was it filed in the US? Once again, it was. We filled out that information about the reporting company.

Now FinCEN knows which company we are reporting to.  Line sixteen is important because this is the demarcation between before January 1st or after January 1st. This is going to determine your filing deadline. Is it 90 days because it’s a brand new entity after January 1st or do you have the full year in which to file? Let’s not check this. Let’s assume this is a brand new entity created after January 1st, 2024.

If it were an existing entity created before January 21st, 2024, then all of this part two  would go away. In other words, the company applicant does not have to report who they are if the entity was created before January 1st, 2024. For brand new entities, the company applicant is going to have to report. Let’s go through this so people know.

If you happen to have a FinCEN ID, you can include it in eighteen and all the rest of the information does not have to be fine. That’s going to save a lot of people some time if you’ve created multiple entities. Now this is the company applicant. They want to know what’s your last name, your first name, middle name and date of birth.

By the way, for our team, this is where we put your PBID. Your personal borrower identity or your borrow application identity. Whatever you’ve chosen as your borrow application identity, we want to sync up because this is now one of the nineteen databases that are going to be pinged for accuracy. We want to make sure that your identity is spectacularly clear. Your PBID or your application identity goes here.

Remember, this is about you. Assuming you created the entity, organized the entity or you directed someone to do that, such as you’re an attorney or CPA. Also, what’s the address? Your address. Here’s the business address or is it a residential address? They just want to know. Once again, the country of jurisdiction, the state and zip code.

Now, is that the current address because now we’re filling out the individual information or is this the address type of the entity we’re registering for?

No, this is the individual now. Let’s assume, you directed your attorney to create this entity. You’re a company applicant and the attorney is now a company applicant.

It would be their business address. Got it.

You’re a company applicant as well because you told them to create this entity. Now, you would be filling out your information here and they would be filling out some information as well.

We could instruct our crew to use their registered business address for this entity as the address. If it’s a true business address, they could use that instead of their residence.

They could. Now, we’ve given our address. They know who we are, except they want to know even more who we are. We have to identify our ourselves so we can give them a photocopy of our driver’s license or our passport. I represent a lot of foreign investors who invest in US real estate. They will have to give me a picture of their passport and we’ll have to include that. Those are the three ways or a fourth way a state or local tribe issued ID. Those are ways you can do it. Let’s say it’s Merrill’s driver’s license. Merrill now has to put in his driver’s license number, the state that issued it and that gives them that degree of information.

Do we upload it? Let’s go back to the very last one. The document all the way to the bottom, it says, “Identifying doc.” We just drag and drop that picture to that or we could go find it on our desktop.

That’s exactly right.

I wanted this to be meticulous for everybody who’s reading.

Let me give you all this. We’re going to go back. This was line 33 and all the way back to line basically nineteen. If you had a FinCEN ID, then all this gets filled in and blacked out and you don’t have to fill it in. in.

That’s going to help my team who buys the shelf companies.

It will help a lot. It’ll save a few minutes. Now, we’re at the beneficial owner’s information. Look up at the top, if you will. We first filled out what file this is. Is this an initial report, an updated report or a corrected report? That’s what we already did. Who was the reporting company? That’s Merrill Chandler, LLC. We reported all the information and the address about the reporting company.

We just did the company applicant who was the person who organized the LLC or directed them to do. We’re that far through and now we’re at the point part three, the beneficial owner information. This is where it gets trickier. This was easy stuff up to now.

If we are either an S-corp or a sole owner of an LLC, 100% owner, and we put it all of our information under company applicants. Do we also need to apply under the beneficial owner as well?  Not just an officer in your INC or a member of your LLC. You’re also a benefit. They want to know both. your legal position and your financial position.

 

That’s correct and let’s assume that in Merrill Chandler, LLC, I’m making this up completely but let’s say you have a wife and two children who are also members of that LLC. You would have to go to this box and add all three other people as beneficial owners of this company. Assuming they have 25% or substantial control.

Only because they’re a beneficiary of my life insurance policy or beneficial, they wouldn’t have to become a beneficial owner until my demise then they would be beneficial owner if they currently are just in my will. Not on the paperwork as a beneficial owner, correct?

That raises the question because if you remembered back on who is not a beneficial owner, it’s someone – who inherits an equity interest by inheritance.

They’re not a beneficial owner.

They would not be a beneficial owner at that point.

Also, a minor. The second they took control of the company, even if it was being run by the officers, they would then have to be added and we would update the filing for this entity because they become a beneficial owner.

Once again, the rule of thumb applies and that is when in doubt, go ahead and file.

To avoid the possibility of penalties. Once again, if somebody has a FinCEN ID, you can insert it in line 36. That’ll save you a little bit. In line 37, they want to know, are you an exempt entity? If you’re exempt, why did you have to even file this much? I don’t understand that but line 38, if you are a beneficial owner, now your last name, first name, middle initial or middle name and date of birth. You must go in line 38 through 42. Your residential address, this is where they want your home address. Not a business address, city, state and zip code.

We’re talking about the person rather than an organization who might be organizing the entity.

That was the company applicant, the one who organized it. Now, this is you because you are the owner of this entity. Therefore, you’re a beneficial owner. This is what the law is trying to get at, who’s the beneficial owner? Now, once again, we have to identify ourselves. You may be thinking, “I did this a minute ago as the company applicant.” Yes, you did but now you’re also a beneficial owner.

You’re going to have to give, once again your driver’s license, the identifying number on the driver’s license or your passport or if you’re not a resident of the US a foreign passport, state and show the picture of the passport, your driver’s license. That pretty much completes the form.

It’s less than a fifteen minute form but you have to do it for every entity of which you have a beneficial ownership interest.

That is correct. Now, the real time-consuming part may be collecting all of the information before you start this filing. Once again, if you wanted to do the PDF filing, which was the first option, then you could stop, go back, find the EIN, get your driver’s license picture, then come back to it and complete it. The one we did was you got to submit it right away in real-time. In that case, if you’re going to use that option and you got to collect all the information, have your driver’s license picture all ready to go in a PDF form.

The good news is, since we file credit applications all the time. Similar things are asked for. It’s on their dashboards or they have them already in their application file ready to go. This will be easy for my crew.

That is great. You’re going to certify that the information is true, correct, complete, and you’re a human. After we do that, this activates and you click next. You will get a some form of receipt that proves the filing was successful. You hang on to those because we don’t know exactly who’s going to ask for those yet but they can end up being very valuable.

I do want to point out that I wouldn’t put it past the banks to be asking for that receipt as part of your filings in uploading documents or with identification or otherwise. They may be asking for that receipt. To be clear, I don’t know if you want to show that, Bob, your name will be on the receipt but the entity you registered will not. You need to hand write or sticky note it or however, if you’ve got several. I’ve got dozens of shelf companies.

We have to file with the receipt and on the PDF, edit it so that we can identify that particular number because they don’t do that for us. I have no idea why. Maybe it’s part of the corporate transparency privacy part, but make sure that you identify that receipt and link it to the entity, especially if you have multiple you’re filing for.

That is is correct. We finished the actual filing. That’s all there is to it. Now, I don’t mean to minimize how important that is or how difficult it is, but nevertheless, we went through the filing. You could see it’s doable and not impossible by any means. No one should be into it.

Fifteen minutes for the first time. If you do a fit, I’m going to recommend my tribe. If you have multiple, get the FinCEN ID because you’re going to be filing more in the future. If you’ve got more than one, get the FinCEN ID and fill it out. It’s a 5 to 7 minute completion time if you got the FinCEN ID. You can make them out and then identify the receipts accordingly.

There you go. That’s correct. If you’ve got some questions about this on the website, they’ve got a lot of resources. You can look at Small Business Resources. I was looking at the reference material, then they have frequently asked questions. Believe me, it can be mind-numbing if you want to dig into that. If you click on Small Business Resources, you get a compliance guide. Once you dig into that, it starts talking about, does my company have to file it? Do I have to report it to it’s beneficial owners? The short answer is  yes. Who is a beneficial owner? It goes through all of these issues in a lot of detail if you’ve got questions.

There is a lot of good guidance on the FinCEN website. They also have step-by-step instructions. If you want to print that out and go through it if you need to, there you have it step-by-step instructions. Now, because this is new, scammers are already trying to make a buck as a result of this. Be aware that FinCEN will not reach out to you. They will not send you emails. They will not call you on the phone. There are scammers out there already and this is a scam letter that one of our clients received.

They said, “Is this real? They’re talking about this new CTA and the fact that I have to file a BOI report.” Take a look at it. It’s from the United States Business Regulations Department. There is no such thing and they’ve got some phony looking thing with the American flag up and business regulation department. Nonsense. This is probably a phishing scheme because they want you to scan this and they’ll get all of your information. Go to BRDPortal.us/portal. That’s their website. It’s not a government website.

Thank you for that.

Beware. Merrill, if any of your clients send you something, “I got this. Is it real?” The is answer is no. Now, does filing this report destroy anonymity that you might have? The short answer is no. You may say, “I revealed all this information. Why didn’t it destroy my anonymity?” The question is, “Who’s got access to this information?”

It is going to be held within the government itself, within FinCEN and on a need-to-know basis, they may share it with law enforcement, if you’re suspected of being a bad guy. They may share it with the state local and federal law enforcement agencies. Once again, it’s on a need-to-know basis. If the banks are asking for this, then you would have to agree to release this information.

It’s like your credit report. You signed it to release permission to pull a credit.

That’s right. The real thing that we’re worried about when we’re talking about anonymity is, does a plaintiff’s lawyer have the ability to go online, search and discover all of this information? The short answer is no. Be aware, if you didn’t already know this, if someone is thinking about suing you and they go to a plaintiff’s lawyer who’s going to work on a contingency fee basis, which basically means they’re going to take a percentage of what they collect.

The plaintiff’s lawyer doesn’t want to spend all that time and money going after you unless they are sure that you’ve got some assets to take. They can do what is called a pre-litigation asset search. There are all kinds of different companies that do this and if they can find publicly available information such as your home address, what properties do you own, or what businesses do you own. They can get a pretty good deal.

The plaintiff's lawyer doesn't want to spend all that time and money going after you unless they are sure that you've got some assets to take. Click To Tweet

All from LexisNexis. Every one of those companies search LexisNexis database and everything you’ve ever owned in the past, much less currently owned, are all listed there.

The question,is this information going to be listed there? The short answer is no. Think of it this way, you reveal all kinds of very personal information on your tax return that goes into the IRS. The tax returns are not publicly searchable and nobody can have access to those. Bad guys within the IRS will leak those from time to embarrass certain rich people but nevertheless, unless something goes badly wrong, this is private information that you’re submitting to the government.

Credit applications are far more more invasive already.

You still have anonymity. Let me remind you once again, if anybody’s saying, “I don’t want to do this.” Do it anyway. The civil penalty is $500 a day for each day a reporting violation occurs. That means if you’re on day 91 and you should have reported yesterday. You’ve got a $500 fine and it’s going to go on until you file. Once again, when in doubt, file. Criminal penalties for willfully refusing to file or willfully filing false information up to $10,000 and two years imprisonment.

Once again, file if you have anything in doubt. If anybody has any questions, I’m more than happy to answer those questions. This is our contact information. Merrill can answer lots of questions as well, but that’s who we are. We’re an Asset Defense team, and that is the business we conduct. You’re welcome to get in touch with us. Let us know that you came from Merrill if that’s the case and we’ll be happy to answer your questions. We don’t want to just field questions from whoever. If you’re paid Americans, we’ll be glad to answer questions.

I’m telling you, Bob, brilliant. Do you see what I mean, folks? Did I deliver? Did I over deliver? I had him do the exact same presentation that I saw because it was so detailed and meticulous. Bob, thank you for joining us. If you have any questions, any Asset Defense Requirements or needs or Q&A, get Bob’s information. He is in my Mastermind. There are 300 of us there, and he’s the go-to genius for all things asset protection.

I highly recommend at least a consult if you’re looking for how to move your chest pieces in the right way and to make sure that nobody gets to your King, then give him a call. Bob, once again, thank you so much for joining me.

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Important Links

• Asset Defense Team
• LexisNexis
• WeWork
• www.FinCEN.gov/boi
• GetFundable.com
• The New F* Word