Category: Economics

BOI Reporting: Wellcome, Big Brother?


If you are a business owner and/or executive and you’ve used an online processor, like LegalZoom, to set up your corporate affairs; or outsource some of your in-house functions to a large service provider, like Paychex, for instance; or employ a fairly sizable CPA company to audit your books – it is most likely that these business partners of yours have notified you at some point last year that you are a subject to the new type of government reporting – the Beneficial Ownership Information (BOI), due for submission to Financial Crime Enforcement (FinCEN) bureau of the US Department of Treasury. 

The rest of the business owners – those without an exposure to large business and/or professional networks – especially the ones running those small, private, neighborhood companies we supposed to cherish as a backbone of the American economy…  Well, I don’t really know how they are meant to find out about this new reporting obligation. FinCEN promised to roll-out a whole awareness campaign with YouTube videos and stuff – but I personally haven’t seen anything like that being pushed at me. Maybe if you search for it, you’ll find something… But how would you know to look in the first place?

I personally discovered it via LegalZoom’s notification sent to an entrepreneur whose books I help to keep. She casually mentioned it to me – I somehow sensed it seriousness and looked into it. Mainly for the sake of the small business owners around me, but also out of the feeling of foreboding this bit of information gave me.

It turned out that FinCEN was formed in 1990 (Wow! The things that fly over our heads! Even if we are somewhat politically alert.) under the parentage of the Office of Terrorism and Financial Intelligence with an official purpose

“to combat domestic and international money laundering, terrorism financing, and other financial crimes”.

Naturally, it is a perfect agency to oversee the specific measures that have been formulated under the Corporate Transparency Act (CTA) signed into power by Congress in 2021 – the federal law pushed through under the banner of

“the 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.”

                                                      fincen.gov, January 29th, 2024

(Again! What ordinary citizen paid attention to that piece of shocking legal maneuvering?!)

One such measure, formulated in March of 2023, is the BOI reporting. I don’t want bore my readers with every single rule and detail pertaining to this new corporate reporting duty. Just bear with me for a few important highlights I’m providing for those who didn’t dive into this issue yet. 

A Beneficial Owner is a person who directly or indirectly exercises substantial control over the reporting company or owns at least 25% of its interests. Now, all senior officers – specifically: President, CFO, General Counsel, CEO, and COO; anyone with an ability to appoint or remove officers or a majority of directors; anyone who is an “important decision-maker”; and anyone (listen to this catchall) who has “any other form of substantial control” are qualified as Beneficial Owners and must be reported as such to FinCEN.

There is an interesting caveat: if a person is not a senior officer, but, nevertheless, exercises significant control over the reporting company through her employment there, that person doesn’t need to be reported. I’m thinking: high-power controllers who value their privacy higher than the status, or simply don’t want to expose their personal info for open access, should stop vying for CFO positions (assuming, of course, the pay is satisfactory). 

Any and all corporations, LLCs, and other entities created through the filing of a document with a secretary of State or any other similar office in the US is obligated to report. I carefully studied the 23 exceptions and can vouch that I personally never dealt with an entity that would qualify for an exemption. Nevertheless, everyone who deals with corporate matters of their businesses/employers is encouraged to study the relevant material at BOI FAQ.

Anyone whom the reporting company authorizes  to act on its behalf may file the BOI report. And this authorized filer, whatever their relationship with the company may be, MUST submit her full name, email address, and phone number. 

The information the reporting company must submit about itself is: full legal name, any trade names (DBAs, etc.), current street address of the principal place of business (to be updated when changes), its jurisdiction of formation or registration, and TIN. The whole kit and caboodle.

For the beneficial owners the reportable data is as follows: name, DOB, residential address, and ID# – either US passport or state driver’s license – and the name of the latter’s jurisdiction. And guess what? The reported ID must be uploaded into the database! Some people may feel relieved that at least they are not demanding the SSN’s. But if you ask me: disclosing your picture ID and the place where you live! Seriously?

But get a load of this! In addition to the information on the entities, their beneficial owners, and those assigned to deal with this by their bosses, the financial crime fighters want to further collect the same info on the individuals they call “applicants” (starting with incorporating dates of January 1, 2024 and on), i.e. the individuals who directly file the documents that create or register the company and those who direct and control the filing. And that’s pretty much any intermediary agent whose services you may engage in the process: accountants, lawyers, formation services, even the messengers delivering the application packages into the hands of the clerks.     

FinCEN openly discloses that any Federal, State, local, and Tribe as well as “certain” foreign officials will be allowed the access to thus compiled database for activities broadly described as “related to national security, intelligence, and law enforcement.” No consents or even notices of the inquiries’ subjects are required. On the other hand, financial institutions need to obtain a reporting company’s agreement before being allowed to take a peek. But who in their right mind says “no” to a bank considering granting you a credit line, for example? Especially if it’s a small entrepreneurial business. Most eager CFO’s and CEO’s wouldn’t even bother asking who exactly will be looking.

The penalties for refusing or foregoing the BOI reporting include both civil and criminal repercussions: up to $500 per day of the violation, $10,000 fine, and up to 2 years of imprisonment.  

So, to summarize: millions and millions of Americans are now forced to make their personal information openly available for access by all and any domestic and international government entities as well as financial institutions, or risk criminal and civil prosecution. I absorbed all that, and I was like: Whoa! What?! George Orwell miscalculated his arrival by 40 years, for sure, but the Big Brother is definitely hear now – not in North Korea, Iran, Russia, China; but here in the United States of A as well as 30-something other “civilized” countries with similar regulations. Of course, I have to be objective about my reactions to such things: I was born and raised under the communist dictatorship of the Soviet Union. Therefore, I have a tendency of seeing things related to governmental interferences in darker lights than most American citizens. I mean, Terry Gilliam’s Brazil (1985) is the avant-garde realism to me, not a dystopian sci-fi as it’s conventionally classified.

Moreover, I’m a libertarian in my political convictions. Thus, personal and socio-economic freedoms are paramount to me. Even more painful for a small-business crusader like myself: Do we really need another negative consideration thrown at potential entrepreneurs considering going into business? It’s fucking depressing – at least to me…

But guess what? It turned out that I was not alone in my fears of the government’s infringing on our democracy. On March 1, 2024, the United States District Court for the Northern District of Alabama held the entire CTA, and BOI requirements in particular, unconstitutional. To the fundamental question of whether the Constitution gives Congress the power to regulate millions of entities and their stakeholders the moment they obtain their formal corporate status from the state, the Court has answered that not only there are no constitutional provisions supporting such excessive claims of power, but there are also no citable precedents or sufficient legal nexus.

For the time being, the Alabama Court’s decision protects from CTA’s enforcement only the specific plaintiffs who filed the claim. We can hope, however, that it will encourage other companies, individuals, civil rights lawyers, etc. in other states, to join the effort of protecting our corporate and individual privacy. Meanwhile, every entity incorporated before January 1, 2024 have to file before the deadline of January 1, 2025 and those incorporated during 2024 – within 90 days after the date of official creation by the state. Starting 2025, the reporting timeframe will be shortened to just 30 days.

Here comes the funny part, though: If you decide to bother yourself with episode 17 of the final (10th) season of The Blacklist, you will be able to see how utterly futile these government efforts are. The vast network the FBI special task force is trying to dismantle during that episode is engaged not only in establishing the fictitious corporate fronts to cover the diverse criminal enterprising, but also in creating flawless, unimpeachable false identities for the individuals – real or virtual – who qualify to be their “Beneficial Owners” under the CTA’s definitions.

I mean, it’s pretty clear to all of us, isn’t it? Those who want to stay hidden – will. Meanwhile, the rest of us will expose our identities to hell knows what kind of breaches and misuses. And if you think that that particular bit of The Blacklist fancy is as phantasmagorical as the rest of the show, we can agree to disagree: I thought it was the most realistic piece of plotting of the entire series. And I watched every single of the 218 episodes and liked quite a few of them too.                 

What Is “Class”? – the American Mis-Confusion


So, somehow I overheard ( which is shocking, believe me, because I don’t really expose myself to this kind of news) that a few weeks ago “people” (who are they? some social media trolls?) got upset with Cate Blanchett (“they” always have a tendency of being upset for all the wrong reasons) on account of her calling herself “middle class”… And I thought: Aha! An excellent opportunity to clarify a thing or two!

Let me first confess: I have never been a big fan of Cate Blanchett as an actress… She has a good screen presence, no matter the setting, but that’s about it . And I’ve even seen her on stage a couple of times too… Including in Liv Ullman’s production of A Streetcar Named Desire, nearly 15 years ago. The critics and the audience raved about it, of course, but, as far as I was concerned, she lacked the emotional fragility necessary for the portrayal of a woman broken in that specific way of Blanche DuBois. I even got  myself in trouble with my fellow BAM patrons by not restraining my opinionated ass on account of that performance…  

But no matter, no matter – as this is not about her acting. This is about her socio-political statements…

(And that’s another thing: Why the hell do people always care so much about what the actors have to say about politics, or social structures, or international relations… Why the fuck the general public bothers itself with listening to  what Barbra Streisand, Bette Midler, Angelina Jolie, Ashley Judd, Madonna, or Cate Blanchett have to say about any of that instead of trying to utilize their own analytical capabilities and form their own opinions?)

So, here is how she described herself, while discussing her experiences of “working with refugees” (of some non-specific kind; yet, her Cannes’ red-carpet dress speaks volumes with that bright and glossy forest-green inset she kept revealing): “I am white, I am privileged, I am middle class…” And somehow it wasn’t the falsely apologetic tone of the whole thing, but the supposed mis-“classification” that got the people upset. Why? “They” explain: the actress’s estimated net worth is $95 million. And “they” think that it disqualifies her as the “middle class”.

Well, let’s see… Even though half-American (on her father’s side), Cate Blanchett was born, raised, and educated in Melbourne, Australia, and is encyclopedically considered an Australian actress. And in that country, as in all former and present parts of the British Empire, societal divisions are still very much defined by one’s familial origins, the ancestry and the hereditary structures. It really has nothing to do with the size of one’s coffers. There are two million millionaires in Australia – the prevailing majority of them are commoners. At the same time a blue-blood aristocrat can be dirt-poor. Therefore, by  these standards Blanchett is absolutely correct, deliberately honest, and entirely un-hypocritical – she is very much a middle-class product: mother’s a teacher, father was a US Navy officer turned an ad exec.

Furthermore, the only American billionaire I knew personally (through a theater charity as a matter of fact) also tried to instill in his three children the idea that they were of the “middle class”. He understood the hereditary class principles simply because his immense wealth placed him very close to the heart of the issue: he knew that his money didn’t make him the upper-class.

And since we’re talking about a screen/stage actor, here’s an example from another frequently produced classical play – Anton Chekhov’s The Cherry Orchard… Keep in mind that Russia had been a monarchy with centuries-old ancestral aristocracy up until just 107 years ago… The play’s central psycho-social conflict is focused on the impoverished hereditary landowners unable to hold on to their estates, including the symbolically precious cherry orchards. Meanwhile,  the wealthy merchant Yermolai Lopakhin, with his peasant familial roots, understands only too well that, in spite of his hard work and all his millions, he can raise himself in the old societal class hierarchy only as far as the middle…  Just like the billionaire I’ve mentioned above… Let me reiterate: the wealth doesn’t make one an aristocrat. 

Generally speaking, the monetary approach to defining societal classes is very much the New World’s notion, which makes me believe that Cate Blanchett’s self-appointed critics are predominantly American. Not surprising at all.

The fact that here, in the States, the vast majority of people consider personal wealth to be the primal factor of the class distinctions is the testimony to two attributes very particular to our country:

A. The strength of our democratic, equal-opportunity roots. In spite of all sorts of privileges and preferential treatments applicable to various and variably defined through the stages of our history societal groups; and with full acknowledgment of the suffocating nepotism that’s been stagnating our progress for decades now – we are still the most democratic country in the world. The state built without castes, aristocratic substructures, and governing rights based on the land ownership. A nation, which believes that a self-made celebrity is equal to the blue-blood royalty. We see nothing especially special in Beyoncé/Jay Z meeting up and chatting with Kate Middleton/Prince William. Hip-pop royalty, sovereign royalty – same difference… 

B. Our preoccupation with money above everything else. And this one is a trait that affects pretty much every single aspect of our nation’s existence – socio-economic, political, and intellectual – not just the interpretations of the societal segregation into classes.

Case in point:

“It is without a doubt a reflection of our society’s values that lesser punishments are doled out to those who take away someone’s innocence, or even life, than to those who take someone’s money.”  

                                                                            I Built This Prison, Part III, p. 344

But let’s assume for a second that everyone around the world adopted the American way of thinking and dismissed the old-world traditions of the class division entirely… For the moment, let’s just focus exclusively on the money factor…

Does general public really think that all those doctors at struggling hospitals and private practices, faceless partners in large law firms, CFO’s of the companies barely breaking even – that they are the middle class?! Why? Because they  make lower, or even mid, six-figure salaries? Let me disillusion you about that! In a larger scheme of things, we are all poor – from welfare recipient to an owner of a multi-million-dollar company with a $500K annual salary. Monetarily, we are all the struggling lower class, with just a slight difference in the purchasing powers. None of us can afford to fly everywhere in the first class (let alone the private jets), stay in suites of the 5-star hotels, dine in restaurants with Michelin stars, casually buy designer bags and suits (especially at today’s prices)… Unless, of course, these luxuries are paid by some companies or some other persons… Moreover, children of the welfare recipients have better medical care through the states or the cities and broader access to the educational finances than those of the wage-paid parents…

And Cate Blanchett with her who knows how securely kept millions is somewhere in the median sector of the wealth curve… Truly of the middle class, no matter how you define the matter. Because the ones in the upper portion of the plentitude are what I call “the really rich people” – the sort of folks the dreamers insert into their billionaire fairy-tale romance novels.   

 

NPR Reports: Prisons Are Not Fit for the Elderly. What Else Is New?


On Monday, March 11th (I beg your pardon – it always takes time for me to summarize my reactions), NPR reported via Apple News (The U.S. prison population is graying fast… by Meg Anderson) that American federal and state prisons are not prepared to deal with their growing contingent of elderly inmates. Primarily because the correctional medical care cannot keep up with this demographic trend.

The provided statistical evidence illuminates the bleak reality: Apparently

“across the nation, between 1999 and 2016 the number of adults aged 55 and older increased 280%, compared to an increase of only 3% in those under 55.”

But what else could we possibly expect? The multitude of our socio-economic problems affects all aspects of life, including the age mix of the prison population: the lifers with over thirty years of incarceration on their shoulders, the repeat offenders who cannot be absorbed into society and keep coming back even in the late stages of their lives, plus the older people who commit their first crimes out of hopeless desperation, yet become the subjects of our brutal sentencing customs nevertheless – it’s only arithmetically natural for the proportion of older inmates to increase.

At the same time, it is absolutely unthinkable for any branch or twig of any governmental body directly or tangibly related to correctional codes to consider age-driven triggers for early releases. I mean, as it stands right now, only terminally ill inmates, with pretty much days to live, may qualify for this rare privilege. Anything short of that retains an inmate in prison until the sentencing conditions are fulfilled.   

It appears that the NPR reporter’s main focus is to single out the truth of the aging prison population as the most crucial factor testing the limits of the correctional systems around the nations in keeping all of their charges healthy.  She further broadens the magnitude of the age effect in one of her leading arguments. Namely that prison is a difficult environment and “people behind the bars tend to age faster.” To support this postulation the article quotes some studies by medical professionals specializing in Public Health, which claim that “incarcerated adults experience accelerated aging” (a term borrowed from engineering practice of specifically designed tests under aggravated conditions to speed up the aging of objects). One of the cited doctors suggests that “geriatric” in prison can mean someone as young as 50. 

Well, let’s set the quality of prison medical care – for the entire imprisoned population, not just for elderly – aside for a moment. Because, first and foremost, I would like to contest the validity of the rapid-aging generalization itself. You see, I believe that it actually depends on the person and her attitude. For example, take me (who else would I take, really?): On the day I was sentenced I was 57 years 2 months and 3 weeks old. And yes, pretty quickly my hair gone completely gray. NYS Department of Corrections and Community Supervision (DOCCS) prohibits hair-dying within its walls. (Unlike the federal prison network, which allows it.) And since I’ve been going gray since I was very young and started my regular visits to a colorist when I turned 35, I had no choice but to turn peppery gray in prison. And yes, Natura Bissē products couldn’t be obtained in the commissary or pass through the package-room regulations. So, it was impossible to hide the gloomy state of mind behind the brightness of my skin… But other than that… After decades of sitting on my fat ass behind my office desk, I managed to use my time in prison to get myself into a much better physical shape than I’ve experienced in my entire life: Walking the significant distances between various destinations of Albion prison’s camp and performing daily tasks of physical labor were at first difficult, than bearable, and eventually easy. I progressed from crawling to power-walking at a speed uncatchable by the smoking 20-year-olds. My first yoga class happened in prison and eventually I geared myself up all the way to the power-yoga level. Moreover, I’ve discovered a rowing machine in the gym… Eventually, I’ve developed muscles in places where I only had fat before. And I felt much healthier than I did outside… I felt 40. No joke… Age is really a very-very relative thing.

That said, however, it is an undeniable truth that cost of medical care for incarcerated individuals, guaranteed by the Eighth Amendment to our Constitution, has been growing exponentially. If not because of the aging per se, but due to the complex combination of factors, including the alarming health and longevity decline in the United States. Note: A recent Harvard study has determined that

“for every two Americans who died age 65 and under, one [MZ: 50%] would have been alive if they lived in Australia, Canada, Germany, Japan, or Portugal. An epidemic of chronic illness has also taken hold, with rates of heart disease, diabetes, liver disease, and obesity skyrocketing and impacting younger populations.”

 

Thus, the percentage of sick people entering various jails and prisons, regardless of their age, is now much higher than anyone expects.  This, along with the persistently increasing price tags of pharmaceuticals and all health-related services, which we all experience whether we are “free” or incarcerated, multiplies the weight of the monetary burden on, already pretty fragile, shoulders of correctional systems. Naturally, the NPR article quotes a few prison officials complaining that it is impossible to care for the older inmates within the existing budget constraints. And I believe them: neither the states nor the federal government have enough money for comprehensive healthcare of incarcerated individuals to begin with; having funds for the permanent geriatric  needs – forget about it!

There is, however, one important factor entirely avoided in the article – maybe deliberately, maybe not: The inherent and persistent problem of the corrections – the utter mismanagement and inefficiency of whatever means they have on hand, sufficient or not. And I don’t know, of course, maybe in the sampled states – Oklahoma, Texas, Michigan, Minnesota – everything is ran in the most methodical and productive ways; and if they had sufficient funds they would be able to medically accommodate prisoners of all ages (though my gut sours in doubt at that)… But I can testify that it would be an impossible dream (and when I say “impossible”, I mean like a fan dreaming of dating her pop-idol) in the prison structure I had a misfortune to experience firsthand, i.e. New York State’s women prisons – the most messed-up can of the administrative worms imaginable, if I have to say so myself.  

There are a couple of essays in “I Built This Prison” specifically related to this subject matter – the general mismanagement, the medical care, and the mix thereof. But here let me just mention a few facts. There are three female correctional facilities in the whole of NYS – one for each level of security: the maximum and the minimum are Downstate, in Westchester County, mere 35 miles from NYC and its multitude of high-quality medical care facilities; and medium located in God-forsaken Albion, practically a stone’s throw away from the Canadian border, with the only hospital servicing the prisoners (Erie County Medical Center) 56 miles away. This latter prison camp is, of course, is larger – both in its capacity and the actual population – than the other two put together. And yet… The Albion Correctional Facility (ACF) has only a tiny medical office with no specialists, no OBGYN, no diagnostics, a few beds, and a handful (literally) of doctors that leave at 3 pm and don’t work on weekends. On the other hand, the Regional Medical Unit (RMU), which can actually be qualified as a prison hospital because it is staffed with medical personnel, including doctors and RN’s on 24/7 duty, and, in addition to 20 infirmary beds, has 30 long-term care beds as well as the maternity and nursery divisions – that’s, ladies and gentlemen, is, of course, in Westchester.

So, if an inmate happens to be pregnant or nursing, they have to be held in the maximum security prison regardless of their actual security gradation. The same goes for the legally blind as they cannot get walking assistance Upstate – and no one knows why. On the other hand, every one who is afflicted by ailments that bind them to wheelchairs, including murderers and other violent criminals, are invariably sent away to Albion – that’s where the mobility assistance is provided, which is by no means a replacement for the proper medical care. Etc., etc., etc., etc. It’s truly bizarre. And none of these three facilities can possibly deal with the needs of the aging population. In Albion, even 72-year-old women cannot obtain medical releases from their mess-hall job assignments, even if their feet double in size by the end of the day from edema – I’ve known them personally…

For further reading:

“I Built This Prison”, Part III: In Case You Were Wondering About the State-Ran Healthcare 

“I Built This Prison”, Part III: Through the Ass Backwards

                    

Clinton/Warren Ticket – Joke of the Week #1


Two blond lawyers wearing pantsuits with deep pockets walk into a bar.

“God, this joint is a mess!” complains the one with $60 million in her pocket.

“Don’t worry,” replies the one with $20 million in hers, “My Dad was a janitor.  I’ll clean this place out in no time.  First, we will raise everyone’s wages to $22/hours; and when the establishment goes belly up, I’ll represent them in bankruptcy hearings, blaming everything on the banks.”   

 

Quote of The Week: Cassandra’s Curse


Quoted directly (as written) from the actual email sent today to the frustrated CFO by her CEO:

“Marina,

You are so right about the economy.  More than a half of the candidates I talked with today are looking for a job because they were laid off as the result of their companies’ downsizing or being swallowed during hostile mergers.  One of the candidates worked for the same company for 20 years, and she is now looking for an entry-level job just to get stable employment with benefits.  Amazing!  Most people don’t even know what’s going on with the economy, because they listen to lies.

LF”