Feds now require registration of most state-created Corps & LLCs

[GunLawyer001]

Most of you who care, are aware that ATF cracked down on NFA trusts a few years back, stripping away anonymity and requiring periodic disclosures of responsible persons. That was at the same time they eliminated the CLEO signature requirement.

People could avoid that by registering individually, or by using Pennsylvania LLC's, which have had no annual filing requirement and no minimum annual tax if you didn't turn a profit. There's a decennial form to file every 10 years if your LLC had no other contact with the state.

Congress enacted (over Trump's veto) a "money laundering" law, as part of the National Defense Authorization Act for Fiscal Year 2021, the "Corporate Transparency Act" (CTA), which goes into effect 1/1/2024 and may apply to some of you with NFA entities. You have to pay a fee (around $65 I heard), and file with the govt some info on beneficial owners.

There are some exceptions, one of them is this:

(xxiii) any corporation, limited liability company, or other similar entity—

(I) in existence for over 1 year;

(II) that is not engaged in active business;

(III) that is not owned, directly or indirectly, by a foreign person;

(IV) that has not, in the preceding 12-month period, experienced a change in ownership or sent or received funds in an amount greater than $1,000 (including all funds sent to or received from any source through a financial account or accounts in which the entity, or an affiliate of the entity, maintains an interest); and

(V) that does not otherwise hold any kind or type of assets, including an ownership interest in any corporation, limited liability company, or
other similar entity;

Not sure what "otherwise hold" means, but if your LLC owns NFA firearms, you might look into filing. It could be argued on an individual basis that a few thousand in guns that aren't going anywhere is de minimus, not within the scope of the law's intent, but that's a gamble.

This is a change in the law, it nullifies some of the benefits of owning NFA firearms via an entity, similar to how ATF gutted the benefits of NFA trusts by previously requiring reporting of responsible persons. Pennsylvania doesn't really care who owns your LLC, but now, in the name of combating Colombian drug lord money laundering, the Feds require you to name yourself, provide proof, and pay a filing fee for the privilege. You can still use entities to bypass probate if you have the proper Operating Agreement to do that, but the anonymity is gone with respect to govt agencies.

Failure to file by 1/1/25 for covered entities existing prior to 1/1/24 can be punished by fines of up to $10,000, and prison for up to 2 years. I would not assume that AG Garland holds a soft spot for gun owners. And remember the ITAR nightmare, with kitchen table gunsmiths being nailed for thousands in fees in the name of "international arms trafficking control".

It's likely to be clarified if small entities with a couple grand in assets are required to report. You wouldn't need to file if you fall within such an exception AND that exception is recognized and defined, but be very sure that you ARE exempt, if you decline to file. You could also pay the NFA Form 4 fees and transfer your toys to yourself individually and save future CTA filing fees, now that the CLEO requirement is gone. An inactive LLC with zero assets would be exempt, per the extract above.

[Rosco the Iroc]

Do you have any links to where this is coming from?

[gnbrotz]

This is a change in the law, it nullifies some of the benefits of owning NFA firearms via an entity, similar to how ATF gutted the benefits of NFA trusts by previously requiring reporting of responsible persons. Pennsylvania doesn't really care who owns your LLC, but now, in the name of combating Colombian drug lord money laundering, the Feds require you to name yourself, provide proof, and pay a filing fee for the privilege. You can still use entities to bypass probate if you have the proper Operating Agreement to do that, but the anonymity is gone with respect to govt agencies.

Failure to file by 1/1/25 for covered entities existing prior to 1/1/24 can be punished by fines of up to $10,000, and prison for up to 2 years. I would not assume that AG Garland holds a soft spot for gun owners. And remember the ITAR nightmare, with kitchen table gunsmiths being nailed for thousands in fees in the name of "international arms trafficking control".

It's likely to be clarified if small entities with a couple grand in assets are required to report. You wouldn't need to file if you fall within such an exception AND that exception is recognized and defined, but be very sure that you ARE exempt, if you decline to file. You could also pay the NFA Form 4 fees and transfer your toys to yourself individually and save future CTA filing fees, now that the CLEO requirement is gone. An inactive LLC with zero assets would be exempt, per the extract above.

Can you point to any further clarification on the bold points? My non-firearm LLC appears to be subject to this, but the official FinCEN site is indicating there is no filing fee, and makes no mention of possible exemptiton based on mimimum asset level.

I want to be sure to be in compliance if it's truly necessary, but I'm not inclined to submit anything that's optional on my part.

[esh21167]

Just for clarity, this would only be for LLC's. Those who have a trust are not affected. That's correct, right?

[GunLawyer001]

Just for clarity, this would only be for LLC's. Those who have a trust are not affected. That's correct, right?

https://www.mwe.com/insights/fincen-...ng%20companies.

[bogey1]

I'm an "S" corp and have a few in the business name.

[esh21167]

https://www.mwe.com/insights/fincen-...ng%20companies.

There are two ways that the CTA may apply to trusts: (1) individuals with power to dispose of assets of a trust that holds ownership interests of a reporting company may be considered as controlling the ownership interests held in trust, and, thus, be beneficial owners if such ownership interests amount to 25% or more of the entity*s ownership interests, and (2) business trusts, which include statutory trusts and Massachusetts trusts, may be considered reporting companies.

It appears that would not apply to a simple trust created to 'own' NFA items, but I'm no lawyer (as you obviously are). I don't believe such a trust would be a 'reporting company.'

https://www.jdsupra.com/legalnews/wh...r-the-2264461/

The statutory definition of a reporting company is short. According to the CTA, a reporting company is a corporation, limited liability company, or other similar entity that is created (a *Domestic Reporting Company*) or in the case of any foreign entity, registered to do business, (a *Foreign Reporting Company*) by filing a document with a Secretary of State or similar office under the law of any U.S. State or Indian Tribe.

A bit over my head, but a simple trust for NFA items doesn't seem to fit that definition. You surely would know better than I though.