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Starting January 1, 2024, numerous businesses in the United States will be required to disclose details under the Corporate Transparency Act (CTA) regarding their beneficial owners—those who ultimately have ownership or exert control over the company. This information must be submitted to the Financial Crimes Enforcement Network (FinCEN), which operates as a bureau within the U.S. Department of the Treasury.

Does my company have to report?

The CTA mandates that corporations, limited liability companies, and similar entities must report if they are either: (i) established by filing with a Secretary of State or an equivalent office under State or Indian Tribe laws, or (ii) foreign entities registered to operate in the United States, except for certain exempt entities. Furthermore, most partnerships, including Limited Partnerships (LPs), Limited Liability Partnerships (LLPs), and Limited Liability Limited Partnerships (LLLPs), fall under the CTA’s reporting requirements, as they are typically formed through a state-level filing.

There are many exempt entities, including, but not limited to, public companies, banks, credit unions, tax-exempt entities, and large private companies.

What does my company need to report?

Beneficial owners of reporting companies will first need to be established based on the criteria set forth by FinCEN. Reporting companies will then need to disclose information about these individuals, such as name, date of birth, address, unique ID number, and image, as well as the entity’s name, address, formation jurisdiction and tax identifier.

For entities created or registered after January 1, 2024, there is an additional report needed for the “company applicant.” The company applicant is the individual who first files or registers the entity. Reporting companies established or registered before January 1, 2024, are not required to report information about their company applicants or update this information, as long as it was accurate when initially reported.

When should we report?

Starting January 1, 2024, FinCEN will begin accepting Beneficial Ownership Information (BOI) reports. The deadlines vary based on the company’s formation or registration date:

  1. Companies created or registered before January 1, 2024, must submit their BOI by January 1, 2025.
  2. Companies formed or registered between January 1, 2024, and December 31, 2024, need to report BOI within 90 days after the effective notice of their formation or registration.
  3. For companies established or registered on or after January 1, 2025, BOI must be filed within 30 days following the effective notice of their creation or registration.
  4. Any updates or corrections to previously filed beneficial ownership information should be reported to FinCEN within 30 days of the change.

What are penalties for non-compliance?

Willful failure to report or update ownership information, or providing false information, can lead to severe civil or criminal penalties, including daily fines or imprisonment. Senior officers may be held accountable for their company’s non-compliance. Penalties also apply for intentionally causing a company to fail in its reporting obligations or for providing false information. However, there is a safe harbor from penalties for voluntarily correcting inaccurate reports within 90 days of the original deadline.

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Please note, all information presented in this post is for general informational purposes only, and the content provided is a summary. Please contact our business attorneys to update your governing documents and contracts and for more information and guidance regarding the effect of the CTA on your operations.

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Coming Soon: Minnesota Retirement Program

10.05.2023 Written by: Henningson & Snoxell, Ltd.

The Minnesota Secure Choice Retirement Program Act (the “Program”) establishes a retirement savings program available to state residents employed by covered employers (those with five or more employees who do not already have a retirement program in place). Under the Program, individual retirement accounts (IRAs) will be established for eligible employees to fund with a portion of their paycheck.

Program Features:

  • Participation in the Program is mandatory for employers that do not currently sponsor their own workforce retirement savings plan, such as a 401(k) plan, or those who have not sponsored one in the 12 months prior to the “Mandatory Implementation” date.
  • Employers are not required to contribute to their employees’ retirement plan.
  • “Covered Employees” include any employee of a covered employer who is at least 18 years old and satisfies any other criteria that may be established by the Program’s Board of Directors.
  • Employees can:
    • elect whether their contributions will be pre-tax or post-tax (Roth)
    • change their contribution rate
    • opt out of participation entirely
  • Employers must provide Program Information to all covered employees (the Program Information required has not yet been made available by the State).
  • Annual limits on contributions to an account under this Program will mirror the Federal IRA limits which are subject to annual adjustments. For 2023, these limits are $6,500 for individuals under the age of 50 and $7,500 for individuals over the age of 50.
  • The Program is set to begin on or after January 1, 2025. The Board of Directors will meet on March 1, 2024, to establish administrative procedures for the Program.

Program Governance: Board of Directors

The Program will be administered by a Board of Directors comprised of seven (7) members: the executive director of the Minnesota State Retirement System; the executive director of the State Board of Investment; three (3) members chosen by the Legislative Commission on Pensions and Retirement with retirement plan expertise; one (1) private-sector member (appointed by the Governor) with plan administration experience; and one (1) small business owner (appointed by the Governor).

Note to Employers:

This means additional requirements for you including, but not limited to, withholding contributions from payroll, remitting the withheld contributions to the program, ensuring all necessary information is provided to employees, etc. So, be sure to pay close attention when this Program becomes effective as civil penalties will be imposed for compliance failures.

We do our best to keep employers updated so that you can make informed decisions as you operate your business. For now, there is no requirement that you implement anything. But if you have any questions or concerns about this Program and what it may mean for your business, please feel free to reach out. A member of our team would be happy to guide you through this change.

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Ban on Captive Audiences

09.15.2023 Written by: Henningson & Snoxell, Ltd.

New legislation went into effect on August 1, 2023 that prohibits employers from discharging, disciplining, or otherwise penalizing employees who decline to attend or participate in employer-sponsored meetings, the primary purpose of which is to communicate the employer’s opinion concerning religious or political matters (“Captive Audience Meetings”). The law also protects employees who decline to receive or listen to employer-sponsored communications. Under the statute, retaliation, or the threat thereof, is prohibited as a means of inducing an employee to attend such meetings or receive such communications. And, under no circumstances may an employer take adverse action against an employee making a good-faith report of a violation or suspected violation of this statute.

The statute does not:

  1. Prohibit communication of information that the employer is required by law to communicate.
  2. Limit employers’ right to conduct meetings involving religious or political matters if attendance or listening is wholly voluntary.
  3. Limit employers’ right to communicate with employees or require the attendance of employees at meetings and other events that are necessary for employees to perform their lawfully required job duties.

Employers must post and keep posted a notice of employee rights, where employee notices are customarily posted if they have not already. Please contact us regarding our best practice recommendations for your workplace or with any questions regarding this new ban on captive audiences.

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How the FFCRA Affects Businesses with Less than 50 Employees

03.31.2020 Written by: Henningson & Snoxell, Ltd.

How the Families First Coronavirus Response Act Affects Businesses with Less than 50 Employees

[Update to this post here – 4/3/2020]

More COVID-19 Resources

Are you a business owner with fewer than 50 employees (for a profit, nonprofit or religious organization)? Are you confused about the specific criteria required to claim an exemption to the expanded leave provisions of the Family’s First Coronavirus Response Act (FFCRA)? If so, you’re not alone. Recently, the U.S. Department of Labor provided much-needed information and guidance.

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Family and Medical Leave Expansion under the FFCR Act

03.27.2020 Written by: Henningson & Snoxell, Ltd.

The new Families First Coronavirus Response (FFCR) Act was signed into law last week, and business owners are wondering how it affects them. How does the new emergency expanion of Family and Medical Leave under this law affect you? We’ve put together an infographic to help you navigate the information.

Emergency Family and Medical Leave Expansion under the FFCR Act
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Please don’t pay anyone to renew your MN Entity Status!

12.18.2019 Written by: Henningson & Snoxell, Ltd.

Warning

Over the past week, I’ve responded to several clients’ emails and phone calls regarding an official-looking form they received in the mail. This form appeared to be a notice for renewing their Minnesota entity status and asked for a payment of $95.00 to be mailed in along with the filled out form.

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