Real Estate Investors Association of Greater Cincinnati

Privacy Gone & Scams


A law taking effect January 1, 2024, has killed any hope of anonymity by using a Wyoming LLC, or an LLC in any state for that matter.  Even if you are not worried about anonymity, you are going to be profoundly affected by this law.

In 2021, Congress passed the Corporate Transparency Act. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

The new program is called the Beneficial Ownership Information Reporting system, and it will be implemented by the FinCEN (Federal Financial Crimes Enforcement Network), a department within the Treasury Department – the same folks who brought you the IRS.

Never heard of FinCEN?  If you have any type of a business (corporation or LLC), it will become as common in your language as the term “IRS.” 

Under the new laws, “beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.”


As of January 1, 2024, you will have to register the “beneficial ownership” of each LLC, corporation, limited partnership, or any other type of business entity.  These are called “reporting companies.”  There are exceptions for the companies with many owners, banks, insurance companies, and lots of other companies that are already regulated.  But this reporting hits the little guys – us!

A “beneficial owner” is any individual who, directly or indirectly exercises substantial control over a reporting company – OR – owns or controls at least 25 percent of the ownership interests of a reporting company.

Existing entities have to be registered sometime between January 1, 2024, and the end of 2024.  If you create a new entity after December this year, you will have to register within 30 days after you file a new LLC, corporation, or other entity with the state.  This reporting requirement isn’t just a suggestion.  You will register, because the penalty is $500 per day after the deadline.  The good news is there is a maximum penalty of $10,000.

You will notice the program is run by the Federal Financial Crimes Enforcement Network.  These guys have guns, and they have all the collection power of their big brother – the IRS.

We don’t have any type of registration forms or instructions yet, but they are promised by the end of the year.  I will do a YouTube video and walk you through filling out the registration forms, as soon as they come out.  The video should be short, because it looks like the only information they want is:

Full legal name

Date of birth

Complete current address

Unique identifying number and issuing jurisdiction (with image) from one of the following non-expired documents: U.S. passport, state driver’s license, identification document issued by a state, local government, or tribe.

If you have a number of companies, like a lot of real estate investors do, you could get a personal “FinCEN identifier” and then just put that number on each company registration to identify yourself.  You can get an identifying number from FinCEN by “providing certain information to FinCEN.”  We don’t know what that information is yet.

I understand that we need to try and shut down the mob and politicians from laundering corrupt money, but this is just another government intrusion into our life.  It’s just a way to harass and control good people.  The bad guys will figure a way around it, and we are stuck with the harassment of another government agency. 


The big sales pitch you get at seminars and online for privacy is to put your corporation or LLC in Wyoming or some other state where the registered agent can put their name on the state records and keep your name off the state records.  Of course, you pay the registered agent and the state for this “privacy,” and they are getting rich.  You are getting poorer.

The name of the registered agent in Wyoming, whose name is on the LLC filing to hide your name, isn’t going to cut it as the beneficial owner under the new FinCEN laws.  Your name is going to be the one reported.

The favorite trick of people to maintain their privacy is to register their company under a registered agent’s name in a glamor state such as Wyoming, and then have that company file for a company in the state where their property is owned or they are doing business.  That isn’t going to work anymore, if it ever did.

Each company is going to have to report information on who the “company applicants” are.  Companies or legal entities cannot be company applicants. There are two categories of company applicants – the “direct filer” and the individual who “directs or controls the filing action.”  That means you aren’t hiding behind your registered agent anymore.

I have always told people to put their LLC in the state where the LLC does business, or where the LLC owns property, and just forget about privacy in exotic Wyoming, Nevada, Utah (ick), or any other state.

I have never thought there was much of any reason to use an exotic LLC.  If someone already had a Wyoming LLC, I have told them to go ahead and use their Wyoming LLC, but it would have to be registered in the state where it owned property or was doing business.  I have said that it might give them a tiny bit of anonymity.

There never was a tax advantage to using an exotic entity.  You are always going to pay tax in the state where the money is earned.  Filing in an exotic state just means you have to file a tax return in the exotic state plus the state where the money is earned. 

There isn’t really any asset protection advantage because any lawsuit will take place in the state where you are doing business or own the property where there was a problem.  The state where the trial is will use its state laws.  Technically, some procedural issues should be decided using the laws in the state where your LLC is formed, but practically speaking you will be using the laws where the trial is being held.

Over the years, tons of people have told me they were anonymous because they filed their LLC in Wyoming.  I have always answered, “I don’t think so.”  Now I know the answer is NO!

In addition to the registration requirements, the government has put a massive data sharing agreement in place.  Each agency is supposed to have access to every other agency’s information on you.  This will speed up your qualification for government benefits, catch the bad guys, allow the IRS to catch cheats, and will provide tons of other benefits.  The agencies are getting much better at sharing data.  States are now even required to feed a lot of their data into the federal system.

This all sounds great, but to law abiding citizens, this is harassment and control.

Kill It

If you have the Wyoming or Nevada LLC or corporation that you have never used, kill it now.  Kill every unnecessary entity you have.  If it is not being used, get rid of it.  Yes, I am being redundant.

The easiest way to kill it is to just not pay the state fees.  If you haven’t been paying the state fees for years, it will be considered dead by almost everyone. 

Actually, if you really have an entity that you have never used, you may not have to report it to FinCEN.  You will have to meet all six of the following criteria to have FinCEN consider it an “inactive entity.”

  1. The entity was in existence on or before January 1, 2020. Y/N
  2. The entity is not engaged in active business. Y/N
  3. The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially. Y/N
  4. The entity has not experienced any change in ownership in the preceding twelve-month period. Y/N
  5. The entity has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding twelve-month period. Y/N
  6. The entity does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity. Y/N

FinCEN may not require you to register, but remember, FinCEN is the little brother of the IRS.  Dormant entities are dangerous when it comes to the IRS.  Do you have an unused EIN out there?  They act as IRS audit magnets. 

If you have an EIN and have filed a 2553 Subchapter S election or an election to be a Chapter C Corporation or LLC, then you may have real trouble.  People get these companies because they get “sold” on how great they are at seminars, and then they never do anything with them.  They never earn any money, so they never file a tax return.   With a C or S Corporation or LLC, you are required to file whether or not you make any money.

For every month that your return is filed late for a C or S tax filing, the penalty at the IRS is $195 per owner (shareholder or member).  I have had folks come to me and Ben with $80,000+ bills from the IRS for a C or S entity they “forgot about.”

If you are filing tax returns for the entity, simply file a final tax return with the IRS to kill your EIN.  Just check the box on the tax from indicating it is your final return.  You can make that filing at any time.  Do it now.

HOWEVER, don’t just file a final tax return on an entity that you have never filed a tax return for.  You have to work directly with the IRS to kill an EIN that you have never used.  If you file a final tax return, the IRS will ask where the prior tax returns are.

It sounds weird, but you need to write the IRS a letter and tell them that the EIN needs to be cancelled because the company never materialized, and no business was ever done in it.   NO money was ever generated in the company. 

Even though you have been paying the state fees for the LLC or corporation you filed and never used, you probably never set up a bank account or did any business with the company.  You don’t have any creditors or debts owed by the company, so it should be pretty easy to make a formal termination or “dissolution” of the entity with the state where it is filed.

The state’s biggest concern is that you leave creditors hanging when you dissolve the entity, but if you have never done any business, it should be easy to satisfy the state that the company doesn’t have any creditors and you can get a formal dissolution of the entity from the state.

The state where the entity is filed will have a dissolution form on its state website.  There is often a fee to formally kill an entity. 

If the entity has never gotten an EIN, then obviously, you don’t need to do anything with the IRS.  If you didn’t get an EIN and you did use the entity in some way, you would have just reported any income or loss on a Schedule C attached to your 1040 return, and the IRS doesn’t even know you have an LLC or other entity.


The question I keep getting is about a trust that owns an LLC or corporation.  You should have your living revocable trust own the stock in your little corporation or your membership interest in your little LLC.  The only reason for doing that is so your family won’t have to probate the entity when you die.

Having a trust own a corporation or LLC doesn’t offer any more asset protection or anything like that.  There really isn’t much anonymity gained by having your trust own your LLC, because your name has to “be on title” as the trustee.  Remember, on any ownership document (stock or membership) the trust’s “name” has to have 1. Name of trust, 2. Date of trust, 3. Name of trustee.

The registration requirement for FinCEN       will undoubtedly require naming the trustees and the beneficiaries of the trust.  Your trust isn’t secret, so you are not disclosing anything important, but this whole thing makes me mad.

Trusts don’t have to report.  They are not “reporting companies.” There are two types of reporting companies: Foreign companies, which you are probably not worried about, and then domestic companies, which are “corporations, limited liability companies, limited partnerships, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.”  There isn’t any state filing with a trust.

However, if your living revocable trust owns an interest in a reporting company, the following individuals may hold ownership interests that will have to be reported:

A trustee or other individual with the authority to dispose of trust assets

A beneficiary who is the sole permissible recipient of trust income and principal or who has the right to demand a distribution of or withdraw substantially all the trust assets

A grantor or settlor (the guy who sets up the trust) who has the right to revoke or otherwise withdraw trust assets

However you own a reporting company, FinCEN is going to be a pain for you, and it could be expensive. 

Two Scams to Watch For

Scam One:  The new Beneficial Ownership Information Reporting program is turning out to be a bonus for scamsters.  They are offering to file for you, or they are calling and demanding information on your company because of the new law that you might have heard something about.

I’ll just let you read the government alert on this scam.

Alert: FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act. The fraudulent correspondence may be titled "Important Compliance Notice" and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages or click on any links or scan any QR codes within them.

Scam Two

The Employee Retention Tax Credit (ERTC) program has been going on since COVID-19.  It is certainly legitimate, but it is pretty hard to qualify for.  The basics were presented by me and Ben Rucker in a YouTube video way back when the ERTC was introduced.

One problem is Congress and the IRS have changed the rules of the game at least a dozen times.  They even changed the name to just ERC (Employee Retention Credit).

There are a number of companies (ERC companies) that have blossomed in the last couple of years to help businesses get the ERC money.  That’s ok, but you don’t want to use one of these companies to see if your company qualifies for ERC money.  If you think you qualify, have your accountant run numbers for you to see if you qualify.

To qualify, you must have had a reduction in income of 50% in a calendar quarter in 2020 compared to the corresponding quarter in 2019.  In 2021 if you have a 20% reduction in income compared to the corresponding quarter in 2019, then you qualify.  If you had a supply chain issue, then you might qualify.  

The ERC companies will tell you that if you couldn’t get toilet paper, then you had a supply chain issue that would qualify you.  (It’s not quite that ridiculous, but almost.)  You must have had a supply chain issue that really hurt your business.

Another problem is, these companies are “fudging” the numbers to make them work.  I have seen them create employees, adjust salaries, and do all sorts of shenanigans to make a company appear to qualify for the ERC money.  They often just tell you that you qualify, with no justification. 

When you get the ERC money from the government, the ERC company takes 15% of it for their services.  It’s a lot cheaper to just pay your accountant to do the work for you, but then you have money output up front.  You don’t pay the ERC companies a dime until you get money from the ERC program.  That’s their brag in the advertising. 

The problem is it will take several years for the government to start auditing the ERC filings.  By the time your company is audited, your ERC filing is compared with your 2019, 2020 or 2021 tax returns, the ERC company that helped you “qualify” will be long gone. 

With a bankruptcy filing of the company, your chance of ever getting your 15% back will be long gone and you will be stuck paying all the ERC money back (including the 15%) plus penalties.  The IRS picks audits by the preparer of the filing that they know fudged the numbers, so be very careful.  If you don’t think you qualify, you probably don’t. 

There is so much fraud in the ERC program the IRS totally stopped processing ERC applications on September 15th.  The IRS has trained almost 4000 more agents on how to audit ERC payments.  The IRS has also issued steps you can take to be forgiven for filing a false application.  Of course, you won’t get your 15% back from the ERC company. 

Between the PPP (Paycheck Protection Program) and ERC, COVID-19 has cost the government billions of dollars in pure fraud.  It is all a mess.

The take-home message in this newsletter is to watch for the reporting requirements on your LLCs and corporation and don’t miss the deadlines.  Be careful of the scammers that are going to capitalize on the entire FinCEN Program.  FinCEN will never contact you by phone or the internet and will probably not even contact you by mail.

The IRS has almost entirely stopped contacting people by phone or the internet because of the fraudsters calling and saying they are from the IRS.  Be CAREFUL!  The old adage is true.  If anyone says, “Hi I’m from the government, and I am here to help you,” you know they are not from the government or they are lying.

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