Wyoming businesses are facing a deadline to fill out a tiny little form that could cause them a big headache if it’s not filed by Jan. 13.
The form is part of the 2021 Corporate Transparency Act, a law aimed at thwarting money laundering by requiring small businesses to disclose their owners.
It had been blocked by a Texas court as unconstitutional. But two days before Christmas and with just five business days left in the year, the Fifth Circuit Appeals Court in Louisiana reversed the Texas court’s injunction and reinstated the law while the court case proceeds. The original deadline to file had been Jan. 1, but the Department of the Treasury has granted an extension to Jan. 13.
That has prompted Secretary of State Chuck Gray to write a letter to Wyoming Attorney General Bridget Hill, urging her to step in and seek an injunction against the CTA in the Cowboy State.
“The state of Wyoming needs to act immediately to protect Wyoming citizens and uphold its sovereignty,” Gray wrote in the letter. “I am formally requesting that your office immediately initiate legal action challenging the constitutionality of the CTA, and seek a temporary restraining order, a preliminary injunction to enjoin its enforcement within Wyoming, and a permanent injunction as well.”
Attorney General Bridget Hill’s office did not respond to Cowboy State Daily’s inquiries about whether she intends to file suit as Gray has urged.
Not The Right Approach To Financial Crimes
Advocates of the Corporate Transparency Act have said the beneficial ownership reports are needed to crack down on those using LLCs and corporate trusts to create a veil of corporate secrecy that hides financial misdeeds like tax fraud, money laundering, financing for terrorism, and other questionable activities.
Gray, however, has said the law is overly broad and is not the right way to tackle these problems.
“This puts a tremendous burden on (a) business at the end of the year with very little warning,” Gray said. “Monday’s decision reversed the injunction that was going to delay implementation of the CTA until the new administration takes office. The CTA is unconstitutional and inconsistent with the history of how the United States handles business law and attacks fraud.”
Gray said it will also be a huge burden for small businesses, including Wyoming ranchers, subjecting them to potentially large fines of up to $591 per day for failing to report, as well as potential prison time.
“I’ve talked to so many business owners who have not been aware of the new federal requirements, and with this ruling, they will be subject to tremendous fines and imprisonment after January 13 for a bill that has already been ruled unconstitutional in two different appeals courts,” Gray told Cowboy State Daily on Thursday.
Tying Trump’s Hands
Gray was also critical of the deadline being set on Jan. 13 — just ahead of a new administration taking office on Jan. 20.
“This prevents the new Trump administration and the new Congress from being able to take action to repeal this bill before the deadline, by placing the deadline one week before President Trump takes office,” Gray said. “I’m very optimistic that President Trump and the new Congress will repeal the law. In fact, President Trump vetoed the CTA during his first term.”
That veto was overridden by Congress in 2020, and the CTA became law in 2021.
“If the repeal of the law is after that deadline, businesses will have already been forced to report,” Gray said. “For that reason, I issued a letter in response to Monday’s ruling on Tuesday to Wyoming Attorney General Bridget Hill requesting she take immediate action on behalf of Wyoming citizens by seeking to stop the enforcement of the CTA in Wyoming with an injunction.”
Gray said Hill’s office has already filed amicus briefs opposing the law, but he believes now is the time to take more action.
“The CTA criminalizes good actors with overburdensome and unconstitutional reporting requirements,” Gray said in his letter to Hill, adding, “States like Wyoming must make a strong stand to stop this federal overreach into our lives before thousands of Wyomingites face civil and criminal violation at the hands of an unconstitutional bureaucracy in Washington DC on January 13, 2025.”
More About Beneficial Owners
The Corporate Transparency Act applies to for-profit, privately held companies registered to conduct business in the United States that have 20 or fewer employees or have $5 million or less in gross sales or receipts.
It doesn’t apply to publicly traded companies or non-profits, which already have their own reporting requirements.
There are 23 exemptions listed by FinCEN, the Financial Crimes Enforcement Network, including banks, credit unions, insurance companies, public utilities, tax-exempt entities and inactive entities.
Under the CTA, beneficial ownership information must be filed by anyone considered a “beneficial” owner of a corporation, even if they do not own the company or have only an indirect stake.
An individual is considered a beneficial owner if they have a major influence on company decisions or operations such as a president or CEO, or if they own at least 25% of a company’s shares or have a similar level of control over the company’s equity.
The report requires taxpayer identification numbers, legal names and trademarks, as well as current U.S. addresses for either the main business site or, if a foreign-based corporation, a U.S. operational location.
Businesses registered or established after Jan. 1, 2024, must also include not just owners, but also applicant’s names, addresses, birthdays and identification numbers such as licenses or passports and the jurisdiction of said documents.
The forms aren’t required annually but must be updated any time the information has changed, including changes due to marriage or divorce, changes of address, new driver’s license with a new number, and so on. Updates are also required for operational changes if duties are delegated to someone new, giving them substantial control of the business, even if that person doesn’t own the business.
It’s important not to get the new CTA requirement confused with beneficial ownership filings that may be required by a businesses’ financial institutions to FinCEN.
While banks and credit unions do use that process to protect themselves from being used for illegal activities, that filing is an entirely different reporting requirement, and does not fulfill the new obligation under CTA.
Failure to submit required paperwork on time is subject to up to $10,000 in fines, as well as criminal penalties that may include prison, according to the U.S. Chamber of Commerce’s guide for small businesses.
Gray: Wyoming Already Takes Fraud Seriously
Wyoming has been taking some heat of late as a “secrecy haven.” It’s recently overtaken Delaware for the most corporate registrations per capita, according to OpenCorporates’ database, which tracks business around the world.
Critics have said Wyoming’s strong privacy laws are attracting the wrong sort of businesses to the Cowboy State — businesses that want secrecy to hide financial misdeeds. Similar criticism has been leveled at Delaware when it was leading the nation in corporate registrations.
Wyoming’s “cowboy cocktail” trust laws allow an LLC, instead of a named person, as the controller of a trust. With an anonymous shell company at the helm of the trust, and a Wyoming-registered LLC, the corporate veil becomes much more private and difficult to pierce, according to critics.
That’s led to reports that entities like Russian oligarch Igor Markov and Argentina’s Braggio family have stashed their cash in Wyoming to hide questionable business dealings from prying eyes.
Gray said his office takes the matter seriously and has “attacked the cowboy cocktail and fraud in real Constitutional ways driven by state policy.”
“In 2023, our office began utilizing a statute to implement a procedure allowing entities to be administratively dissolved when a false document has been filed with our office,’ he said. Dissolutions of fraudulent entities have occurred using this process including entities tied to North Korea.”
Gray has also been working on new state laws to attack fraud during the 2024 interim through the Joint Corporations, Elections, and Political Subdivisions Committee, which are expected to work their way through the legislature in 2025.
Renée Jean can be reached at renee@cowboystatedaily.com.
