New FinCEN Proposed Reporting Regulations for Residential Real Estate
On February 16, 2024, FinCEN published new proposed anti-money laundering regulations for certain residential real estate transfers. These proposed regulations may be easy to overlook; however, trusts and estates practitioners should keep an eye on them. The proposed regulations would impose reporting requirements on certain “non-financed” transfers of residential real property, including transfers by gift or note, into revocable and irrevocable trusts and into other entities, such as limited liability companies. Similar to the reporting requirements under the Corporate Transparency Act, certain information about the beneficial owners of a transferee trust or transferee entity would need to be reported to FinCEN within 30 days of the transfer. While there are rules intended to determine who must report the transfer, ultimately in the garden variety transfers made for estate planning purposes, the lawyer who creates the deed will likely be the person required to report. Comments on the proposed regulations are due to FinCEN by April 16, 2024. A link to the Federal Register for the proposed regulations is available on our Corporate Transparency Act Resources page.
New Development Regarding the Corporate Transparency Act
Speaking of the Corporate Transparency Act, in National Small Business United v. Yellen, No. 5:22-cv-01448-LCB (N.D. Ala. Mar 1, 2024), the Northern District Court of Alabama ruled that the Act is unconstitutional on the grounds that it exceeded Congress’ legislative powers.ย The Court also specifically enjoined the government from enforcing the Corporate Transparency Act against the Plaintiffs in the case, though there is no mention of whether the government can otherwise enforce the Act against others.ย With the initial 90-day filing deadline for newly formed reporting companies approaching at the end of March, it seems probable that the government will appeal the ruling and either request a stay of the injunction or voluntarily announce a further delay in the reporting deadlines to prevent inconsistent enforcement issues.ย A link to the memorandum opinion is available on our Corporate Transparency Act Resources page.
Author
Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished) is a partner with Keebler & Associates, LLP and is a 2007 recipient of the prestigious Accredited Estate Planners (Distinguished) award from the National Association of Estate Planners & Councils. ย He has been named by CPA Magazine as one of the Top 100 Most Influential Practitioners in the United States and one of the Top 40 Tax Advisors to Know During a Recession. ย His practice includes family wealth transfer and preservation planning, charitable giving, retirement distribution planning, and estate administration. ย Mr. Keebler frequently represents clients before the National Office of the Internal Revenue Service (IRS) in the private letter ruling process and in estate, gift and income tax examinations and appeals, and he has received more than 250 favorable private letter rulings including several key rulings of โfirst impression.โ ย He is the author of over 100 articles and columns and is the editor, author or co-author of many books and treatises on wealth transfer and taxation. ย Mr. Keebler has been a speaker at national estate planning and tax seminars for over 25 years including the AICPAโs: Estate Planning, High Income, Advanced Financial Planning Conferences, ABA Conferences, NAPEC Conferences, The Notre Dame Estate Planning Conference and the Heckerling Estate Planning Institute and is the immediate past chair of the AICPAโs Advanced Estate Planning Conference.
