12 minute read
BUSINESS LAW
Update on the Corporate Transparency Act of 2020
In the March/April 2022 issue of On Balance, we wrote to inform Wisconsin’s CPAs about the federal Corporate Transparency Act of 2020 (CTA) and how it could impact them and their clients. Since then, the final regulations governing the implementation of the CTA have been approved. We wrote this article to share details on the final regulations and what they mean for CPAs and their clients. Before getting into the details, note that the timelines for the CTA have been pushed forward. 2023 will be a year of planning since the implementation of the law begins Jan. 1, 2024. Business service providers should have the time to prepare. The CTA’s goal is to prevent fraudulent actors from using business entities to launder money and hide assets, and it empowers the U.S. Treasury Department to deal with these activities through its Financial Crimes Enforcement Network (FinCen). We wrote in the first article that most business entities in Wisconsin will be required to report the names of their beneficial owners, including those who exercise substantial control and those who own or control 25% or more of their equity, as well as their applicant, who is the person who filed the application to form the entity (such as Articles of Incorporation or Articles of Organization). Large organizations remain exempt, as they are more likely to be required to provide this information to other governmental agencies. These are organizations with at least
By Joseph W. Boucher, CPA, MBA, JD and Sam Wayne, JD
20 full-time employees; gross domestic operating receipts of $5 million or more, as shown on the entity’s federal tax filing; and a physical office in the United States. Entities that move over or under either the employee or gross receipts line should expect to report their information to FinCen. PCAOB accounting firms also are exempt. The final regulations clarify that: 1. Existing entities will not be required to report on their applicant(s). With harsh penalties for noncompliance of up to $500 per day or imprisonment, this was a matter of great concern, as it would be a great burden for a legacy company to track down the names and contact/ identification information of the person(s) who filed the initial formation application.
2. For each beneficial owner, existing entities will be required to report their full legal name; date of birth and current residential street address; and the identification number from an acceptable identification document, such as a valid passport, a driver’s license or an identification number assigned by FinCen. For non-FinCen identification numbers, the entities will be required to upload a scan of the identification documents. 3. Entities existing prior to Jan. 1, 2024, will have until Jan. 1, 2025, to report this information for all beneficial owners. 4. Beginning Jan. 1, 2024, new entities will have 30 calendar days to report this information for all beneficial owners as well as for applicants. 5. A “beneficial owner” is defined as an individual who exercises substantial control over the entity or owns 25% or more of the entity. a. A person exercises substantial control if they: i. are a senior officer with the entity, excluding corporate treasurers and secretaries but including general counsel; ii. can appoint or remove senior officers; iii. are a board member and have either control of or substantial influence on the board of directors; or iv. have at least substantial influence over important matters affecting the entity.
b. The 25% ownership threshold applies to an individual who owns at least that percentage of equity (or, for a corporation, voting rights), including: i. capital or profits interest, ii. convertible debt, iii. options and iv. any other manner in which an individual may obtain such an interest (drafted as a catch-all). c. The 25% ownership threshold compares ownership via these instruments to the undiluted interest — meaning authorized but nonissued shares do not count. 6. Entities must identify the “real party in interest” — meaning that creative structuring of ownership will not exempt the individual beneficial owner from disclosure. 7. Entities will be required to update reported information in the case of any change to: a. the identities of the entity’s beneficial owners (upon death of an owner, update required after settlement of estate), b. the identification information of any beneficial owner, c. the identification information of any applicant and d. the entity’s exempt status. 8. No update must be reported for an expiration and reissuance of an identification document but must be reported for a new identification number. 9. All changes must be reported within 30 days and must be reported even if another change supersedes that change within the 30-day reporting period. 10. Errors must be corrected within 30 days of when the entity knew or should have known of the error, and a “safe harbor” from civil or criminal penalties applies only if errors are corrected within 90 days of the inaccurate filing. 11. Individual filers, entities and those who direct the filer are subject to the civil and criminal penalties. The consensus among business lawyers is that these regulations are poorly drafted, causing uncertainty as to who must be reported as a beneficial owner. With harsh penalties for noncompliance, if there is any doubt, it is in the client’s interest to report an individual as beneficial owner. Clients should obtain the advice of counsel before they make any decision not to report information for an individual who may be a beneficial owner. This law gives CPA firms another opportunity to provide important services to — and add value for — their clients. We recommend that CPA firms solicit appropriate information from their clients during their annual contacts with them for either financial statement preparation or tax returns, and that their clients keep them apprised of changes in ownership or the filing of new entities.
Joseph W. Boucher, CPA, MBA, JD, is a founder and shareholder of Neider & Boucher S.C., a Madison law firm. Contact him at 608-661-4535 or jboucher@neiderboucher.com. Sam Wayne, JD, is an attorney with Neider & Boucher. Contact him at 608-441-2523 or swayne@neiderboucher.com.
Brian Begalke John Scheid Justin Schutte
Brian Begalke, CPA, has been promoted to partner in charge of the tax and consulting division at Begalke & Associates LLC, located in Sheboygan and Plymouth.
Michael Carter, CPA, is moving from his role as chief financial and risk officer at Northwestern Mutual to chief of staff for the Office of the CEO. He will serve as the chair of the company’s senior leadership team.
Christine Dahlhauser, CPA, managing partner for the Madison office of Baker Tilly US LLP, was named by BizTimes Media as one of Wisconsin’s most influential business leaders of 2022.
Patrick J. “P.J.” DiStefano, CPA, MBA, managing partner of the Milwaukee practice at Deloitte & Touche LLP, was named by BizTimes Media as one of Wisconsin’s most influential business leaders of 2022.
Richard (Dick) Gebhard, CPA, has been honored by the Beloit Historical Society for his vast community service work, and the Beloit Daily News named him Volunteer of the Month in September 2022. Gebhard, 92, has been an active WICPA member for many years.
Kurt Gresens, CPA, CMA, CGMA, managing partner and chairman of the board at Wipfli LLP, was named by BizTimes Media as one of Wisconsin’s most influential business leaders of 2022.
Kirsten M. Houghton, CPA, MBA, CGMA, principal at SVA Certified Public Accountants S.C., has joined the board of directors of Madison’s Isthmus newspaper. Todd Jones, CPA, will assume the role of Northwestern Mutual’s executive vice president and CFO.
Aaron Simanek Victoria Thayer Ed Thelen
David Ring, CPA, CGMA, chief financial officer at Sentry Equipment Corp., was named a CFO of the year by the Milwaukee Business Journal.
John S. Scheid, CPA, has been appointed to the Sprecher Brewing Co. board of directors.
Justin J. Schutte, CPA, EA, has been promoted to manager at Berndt CPA LLC in Madison.
Aaron Simanek, CPA, has been promoted to supervisor at SVA Certified Public Accountants in Brookfield.
Terry Strittmater, CPA, was named among Wisconsin’s most influential business leaders of 2022 by BizTimes Media. Strittmater, based in Wauwatosa, is the managing principal of southeastern Wisconsin for CliftonLarsonAllen (CLA).
Victoria Thayer, CPA, MSA, has been promoted to manager at Berndt CPA LLC in Madison.
Ed Thelen, CPA, has received the 2022 District 35 Toastmasters “T” award, based upon his significant contributions to improving and advancing the cause of Toastmasters in District 35 over a period of years, including serving as district director in 2018-2019.
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Robert J. Daley Sr, CPA (1927–2022)
Robert (Bob) J. Daley Sr, CPA, passed away on Friday, Nov. 18, 2022. After graduating from Aquinas High School in La Crosse, Daley studied accounting at UW–Wisconsin and Southern Methodist University in Dallas. He became a CPA and worked for Hawkins Ash Baptie & Co., retiring from the firm in 1992. Daley was involved in myriad organizations, including serving as president of the La Crosse Rotary Club; chair of the Catholic Social Services Advisory Board; chair of the Wisconsin State Audit Committee for the Knights of Columbus, Knight of the Equestrian Order of the Holy Sepulcher of Jerusalem; director of the La Crosse County Taxpayers Association; Grand Knight of the Knights of Columbus; president of the La Crosse Sierra Club; and president of the Western Chapter of the WICPA. He was also a member of the AICPA and both the Minnesota and Michigan institutes of CPAs. Daley served for many years on the Viterbo University board of advisors and was active in numerous capacities with the National Association of Housing and Redevelopment Officials. For six years, he was a director of the Associated Accounting Firms International, an association of 35 independent CPA firms with offices in the U.S., Canada and the United Kingdom. He is survived by his seven children, 13 grandchildren and 11 great-grandchildren. Elliot Ames Kaas, CPA (1949 – 2022)
Elliot Ames Kaas, 73, of Eau Claire, passed away on Thursday, Dec. 22, 2022. Kaas attended Osseo High School, and after graduating in 1967, he went on to earn a bachelor of science degree in accounting from the University of Wisconsin–Eau Claire in 1971. In 1994, he earned an MBA from the University of Minnesota. As a CPA, Kaas worked at Bertelson & Co. and then helped start Andersen Bowman & Co., which later merged with Wipfli LLP in 2000. He retired in 2009 and became a member of the Elks Lodge 402 in Eau Claire in 2011. Kaas was named Elk of the Year in 2012 and served as the Exalted Ruler of Lodge 402 at the time of his death. He is survived by his wife, Lizabeth Kaas; two daughters; three grandchildren; his brother; and many other relatives and friends.
Donald J. Roblee, CPA (1944–2022)
Donald J. Roblee, CPA, age 78, passed away Thursday, Nov. 10, 2022. Roblee graduated from Marquette High School and went on to earn an accounting degree from the University of Wisconsin–Milwaukee, ultimately becoming licensed as a CPA. He served businesses and individuals for many years through his Elm Grove firm, Roblee Group LLC. After retirement, he enjoyed playing golf in Arizona as well as at the Wisconsin Club in Milwaukee, taking bicycle excursions in Wisconsin and Europe, traveling the world and watching the sunset on Lake Katherine on family vacations up north. Roblee is survived by his wife, Terry Kaminski; a son and daughter; five grandchildren; two brothers and a sister; and many other relatives and friends.
Nicholas S. Lascari, CPA (1947–2022)
Nicholas S. (Nick) Lascari, CPA, passed away on Wednesday, Nov. 2, 2022, at the age of 74. He was a longtime WICPA member and past board president who served on numerous committees, taught CPE courses and was on the AICPA Governing Council from 2013–2016. In 2013, he was awarded the WICPA’s Distinguished Career Award. Lascari graduated from Marquette University in 1970 (summa cum laude) with a BSBA in accounting and finance. He was licensed as a CPA in 1972. His career included a senior tax manager position with Baker Tilly Virchow Krause LLP and partnerships with the firms of Vrakas/Blum S.C.; Conley McDonald & Co.; Virchow Krause; Balistreri, Jezo and Lascari LLP; and Gordon J. Maier & Co. LLP. Lascari also served as treasurer of the Better Business Bureau of Wisconsin Inc. from 1998–2013. Preceded in death by his beloved wife of 51 years, Delores, Lascari is survived by his sons, Scott (Michelle) and Jeff Lascari; four grandchildren; a sister; and other caring relatives and friends.
If you are aware of a member obituary and believe it should be included in Memorials, please send a copy of the obituary or contact Marcia Tillett-Zinzow at mtzinzow@icloud.com.
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