Construction Bills: Recent Changes to Construction Laws

• Date: 01 April 2024
• Author: Brian R. Zimmerman and Rowan T. Mason

Forum on Construction Law The Construction Lawyer Volume 43, Number 2 CONSTRUCTION BILLS: RECENT CHANGES TO CONSTRUCTION LAWS By Brian R. Zimmerman and Rowan T. Mason Corporate Transparency Act Creates Large Database of Small Business Owners As of January 1, 2024, many small business entities will be required to report “Beneficial Ownership Information” (BOI) to a Federal Beneficial Ownership Secured System (BOSS) database maintained by the US Government’s Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of Treasury. 1 These new reporting obligations are the result of the Corporate Transparency Act (CTA), 2 enacted in 2021, with the goal of enhancing transparency in small business ownership to combat money laundering, tax fraud, and other illicit financial activities. Reporting Companies Entities required to report BOI (reporting companies) 3 include corporations, LLCs, LLPs, LPs, and other entities: 1. created in the United States through filing a document with a secretary of state or similar governing office or Indian tribe, or 2. foreign companies registered to do business in any US state or Indian tribe. Exempt Entities The CTA identifies 23 categories of businesses exempt from the reporting requirements. 4 Many of the exempt business categories include those related to regulated industries, including banks, insurance companies, brokerage companies, credit unions, accounting firms, public utilities, securities brokers, tax-exempt entities, and several other special entities. Noticeably absent from the specific exemptions listed are law firms, as well as architects, engineers, contractors, or other construction industry participants. However, there is a broad exemption for “large operating companies” 5 that have: (a) over 20 full-time employees in the United States; (b) an operating presence at a physical office in the United States; and (c) more than $5 million of gross receipts or sales, excluding from sources outside the United States, as reported on a federal income tax or information return in the United States for the previous year. There are special rules requiring only limited information reporting for entities whose ownership interests are held through one or more entities, all of which are exempt from reporting. 6 For example, a general contractor that falls into the large operating company exemption, which has a wholly owned subsidiary LLC, is only required to report the names of the exempt entities. Reporting Requirements Entities in existence prior to January 1, 2024, will have until January 1, 2025, to file BOI through the BOSS. A reporting company created or registered in 2024 has 90 calendar days to file BOI through the Published in The Construction Lawyer Volume 43, Number 2, ©2024 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. Forum on Construction Law The Construction Lawyer Volume 43, Number 2 BOSS. Entities created or registered on or after January 1, 2025, will have only a 30-day filing window. Update Reports After the initial BOI report...