CLARIFYING THE CORPORATE TRANSPARENCY ACT New Disclosure Law Impacts Distilleries and Other Alcohol Manufacturers WRITTEN BY STACY C. KULA AND CHRISTINE M. GREEN
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new federal disclosure law effective this year will require many companies, including distilleries and other alcohol manufacturers, to report beneficial ownership information to the federal government. Unlike many of our country’s disclosure laws, this one has a broad reach and focuses on smaller companies. This is the first time our country has had this type of disclosure law in place. In many instances, complying with the law will be relatively straightforward, but doing so will be an administrative inconvenience and another cost of doing business for alcohol manufacturers. Although not so very different from what is already required to be reported to the Alcohol and Tobacco Tax and Trade Bureau (TTB) and state Alcoholic Beverage Control (ABC) agencies, it is important to understand whether your business is subject
to these new reporting requirements and the civil and criminal consequences of failing to properly report.
NEW DISCLOSURE LAW The disclosure law was enacted as part of the Corporate Transparency Act1 and requires companies to report information about themselves and their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Department of Treasury. The purpose of the law is to identify companies that are used for illicit and criminal activities like money laundering, tax fraud, and terrorism. The law subjects most smaller companies to the reporting rules. Many distilleries, rectifiers, bottlers, warehousemen, and other alcohol manufacturers are within this group. Some larger companies that already report 1 See 31 U.S.C.A. § 5336. A federal district court recently held that the Corporate Transparency Act is unconstitutional and that the government is unable to enforce the new law against the particular plaintiffs in the case. See Nat’l Small Bus. United v. Yellen, Case No. 5:22-cv-1448-LCB (N.D. Ala. March 1, 2024). Despite this holding, most companies will need to comply with the new reporting rules unless future guidance or law says otherwise.
In many instances, complying with the law will be relatively straightforward, but doing so will be an administrative inconvenience and another cost of doing business for alcohol manufacturers. W W W . ARTISANSPIRITMAG . C O M
beneficial ownership and other information to the federal government in some manner will be able to take advantage of exemptions from reporting. For example, publicly traded companies that are subject to various federal disclosure rules are not subject to the new law. According to FinCEN, the information reported will be stored in a secure, nonpublic database. Although the database is not available to or searchable by the general public, FinCEN will permit government officials at the federal, state, and local levels access to reported information for national security, intelligence, and law enforcement purposes. Many expect that the IRS will not be shy in making use of the available data.
REPORTING COMPANIES The new law applies to all corporations, limited liability companies (LLCs), limited partnerships, and any other entities formed or registered to do business in the United States. This includes foreign entities from outside the United States registered to do business in a state. A company subject to the law is called a “reporting company.” Most typical trusts are not treated as a “reporting company” subject to the new law. The law does not differentiate or distinguish based on industry. So a corporation that operates a distillery2 and a corporation that rents real estate are both subject to the reporting rules. 2 For the sake of ease, the authors primarily reference distilleries by way of example in this article, but the disclosure requirements of the Corporate Transparency Act can also apply to rectifiers, warehousemen, bottlers, wineries, breweries, and other alcohol manufacturers.
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