What businesses need to know about new federal transparency law in 2024
Congressman Garamendi says the new law will prevent secrecy like the nearly $1 billion land acquisition in Solano County.
SAN FRANCISCO (KGO) -- A new federal law that goes into effect next year will impact millions of small business owners and companies by mandating more transparency on information reported to the federal government.
Starting Jan. 1, the Corporate Transparency Act will bring big changes to small businesses, corporations, or other domestic or foreign entities like LLPs or LLCs that file documents with the secretary of state.
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The legislation passed in 2021 to combat illicit activity, including tax fraud and money laundering.
"The purpose is to find out who is doing business in the United States," said Rep. Garamendi, (D-Solano County). "The beneficial owners or the people who are receiving benefit from the corporation or from the LLC or partnership will have to disclose who they are."
The beneficial owners is the person or people who have substantial control over the company or controls at least 25% of the ownership interests.
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Congressman Garamendi says the new law will prevent secrecy like the nearly $1 billion land acquisition in Solano County that was kept quiet since 2018.
"The Corporate Transparency Act would provide some information, perhaps not the total detail that would be necessary, but at least would require knowledge as to who the beneficial owners are, and it would have terminated all the secrecy that was going on in Solano County," Garamendi told the ABC7 News I-Team.
In September, the I-Team sat down with California Forever CEO Jan Sramek. During that interview Sramek told us the company provided the entire investor list to the federal government.
"...A long time ago," said Sramek.
"The entire investor list?" the I-Team's Stephanie Sierra asked.
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"Yes," he said.
"When you say a long time ago, when was that?" Sierra asked.
"At least six months ago," Sramek said.
"Six months ago, but these purchases started back in 2018."
"That was the first time anyone asked us," Sramek said.
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In early September, California Forever publicly identified numerous Silicon Valley investors, such as Marc Andreessen, Patrick and John Collison, Chris Dixon, John Doerr, Nat Friedman, Daniel Gross, Reid Hoffman, Michael Moritz, Laurene Powell Jobs, and the California investment firm Andreessen Horowitz.
Rep. Garamendi says there's still more questions.
"And to this day, even though we have some information, we still do not know where all the money comes from," Garamendi said.
Under this new law, companies that meet certain criteria will be required to report beneficial ownership information or BOI to FinCEN, the Financial Crimes Network. Garamendi says there are 23 exceptions to the law, including domestic government authorities and banks, but it's still unclear if any of them will apply to California Forever.
"It will force, at least in the case of California, Flannery Associates to come forward with additional information about the various LLCs that provided money for California Forever or Flannery Associates," said Garamendi.
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