Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
Chamber members:
The new year is off to a start with what seems to be the same old story … federal government funding and a looming shutdown. More information on the reemergence of that topic here in 2024. Also, last call for the deadline on the Illinois Back to Business New Business Grant Program. Details are below.
*Government Affairs Roundup brought to you by CITGO & Silver Cross Hospital*
Will new funding deal prevent a shutdown?
On Tuesday, Congress reconvened in Washington, with the looming possibility of cutting off funding for significant portions of the government in just 11 days unless specific demands regarding immigration and border restrictions are met. Speaker Mike Johnson (R-La.) and Senate Majority Leader Chuck Schumer (D-N.Y.) reached a deal on the total government expenditure for the upcoming year, breaking one deadlock but leaving the threat of a shutdown after January 19 still in play.
Speaker Johnson, seeking his inaugural major legislative achievement, faces a precarious environment where crossing members of the Freedom Caucus could jeopardize his position. Many in Congress view shutdown threats as politically damaging, especially in an election year. The influence of former President Trump, particularly on signature issues like immigration and border security, adds another layer of complexity to Johnson’s strategy and political standing.
Additionally, bipartisan Senate negotiators are reportedly making progress on border talks that have delayed the approval of a $106 billion national security supplemental requested by the White House. While there is optimism, significant hurdles remain that could reignite fears of a shutdown or disrupt the protracted debate over aid to Ukraine and Israel.
Key issues include:
Unhappy Conservatives: Johnson’s team promotes the caps deal as a conservative victory, emphasizing significant budgetary achievements. However, some conservatives, particularly in the Freedom Caucus, express dissatisfaction, viewing it as a failure and urging Johnson to withhold government funding until Democrats support stricter border controls.
Johnson Under Pressure: Johnson faces the challenge of navigating the spending bills for 2024 amid pressure from conservatives. The risk of a potential coup, similar to the one against former Speaker McCarthy, looms if he relies heavily on Democratic votes to pass appropriations bills.
The Calendar and the Count: With only eight legislative days to turn topline numbers into legislation, time is of the essence. Johnson rejects short-term continuing resolutions (CRs), and the slim majority in the House, coupled with leadership absences, complicates the situation.
Political Theatrics: While Democrats privately commend Johnson for his handling of spending talks, political theatrics, including hearings on the impeachment of Homeland Security Secretary Alejandro Mayorkas and a vote on holding Hunter Biden in contempt of Congress, add complexity. The ongoing effort to impeach President Joe Biden and the backdrop of the presidential primary season further contribute to the intricate political landscape.
In summary, the political dynamics surrounding government funding, coupled with contentious issues like immigration and border security, present a challenging landscape for Speaker Mike Johnson as he navigates the upcoming legislative agenda.
What Every Small Business Needs to Know About the Corporate Transparency Act
The Corporate Transparency Act (CTA) went into effect on January 1, 2024, impacting millions of small businesses across the U.S. Knowing the intricacies of this act and its potential impact is essential for small businesses. Otherwise, they may incur criminal or civil penalties for not filing or updating this report.
What is the Corporate Transparency Act?
Enacted in 2021, the CTA aims to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.
The CTA was established to prevent individuals with malicious intent from hiding or benefitting from the ownership of their U.S. entities to facilitate illegal operations which, according to Congress, is a widely used tactic that affects national security and economic integrity.
Who is considered a beneficial owner of a company?
According to the CTA, an individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. This person either has a major influence on the reporting company’s decisions or operations, owns at least 25% of the company’s shares, or has a similar level of control over the company’s equity.
What information must be reported about a company’s beneficial owners?
The details that reporting companies need to include in the BOI report vary based on the date their business was established. Businesses registered or established post-January 1, 2024, must provide information regarding the business, its beneficial owners, and its company applicants — including owners’ and applicants’ (if applicable) names, addresses, birthdays, and identification numbers (such as a license or passport number), and the jurisdiction of the documents. However, businesses established before that date can omit information regarding company applicants.
All reporting companies must provide their legal name and trademarks, as well as their current U.S. address, which could be either the address of its main business site or, for foreign-based companies, their U.S. operational location. They’ll also need to provide a taxpayer identification number and specify the jurisdiction where they were formed or registered.
Though no annual reporting requirement has been set, the initial filing period is not the only time you’ll be required to submit information, according to Roger Harris, President of Padgett Business Services.
“In addition to the required initial filing, there are requirements to update the original filing when things change,” Harris told CO—. “Some of the things that require an updated filing are not things a business owner has ever thought were important to track, and the timeline to report these changes can be as short as 30 days.”
Harris noted that business owners may be surprised by some requirements for updated filings. For instance, if a beneficial owner changes their address, legally changes their name due to marriage or divorce, or obtains a new driver’s license, it may necessitate an update to a company’s BOI report. Operational changes or a new delegation of authority could also qualify.
“If you make changes in the operation and delegation of duties within your business that could be considered to give a new person substantial control of your business, you could be required to update your filings, even if the person performing those duties did not own any of the business,” said Harris.
What is the beneficial ownership information reporting process?
Beginning January 1, 2024, reporting companies will have a limited time to file their initial BOI reports. For qualifying reporting companies established before the above date, the filing deadline is January 1, 2025. Those created between January 1, 2024, and January 1, 2025, will have 90 days from either the actual notice of formation or public announcement, whichever comes first to file. Businesses established on or after January 1, 2025, will have 30 days from notification or public announcement of their formation to submit their first report to FinCEN.
Two types of reporting companies will be required to submit BOI reports: domestic reporting companies, including LLCs, corporations, and other entities formed through filing with a secretary of state or a comparable office in the U.S.; and foreign reporting companies that are registered to conduct business in the United States through filing with a secretary of state or an equivalent office.
Businesses will not incur a fee for submitting their reports, and electronic forms will be available on FinCEN’s website.
Where can business owners get help with their beneficial ownership information reports?
Though companies may opt to file their own BOI reports, Harris advised business owners against this. “It may not be difficult to complete the forms, but with everything a small business owner must do to operate a successful business, I fear this is something that could be missed or not done [promptly],” Harris explained.
Instead, he recommends consulting a knowledgeable advisor, such as an attorney or an accountant, when filing the initial and/or updated reports to ensure they’re completed on time and to FinCEN’s standards.
“There are some issues in the law that could require an interpretation of certain facts to determine who is a beneficial owner that must be included in the filings,” Harris said. “If you find yourself in this situation, … consult with an attorney to help you decide how your set of facts fits within this law.”
For those with a straightforward path, Harris believes an accountant or tax preparer may be sufficient. However, he cautioned that not all accounting and tax professionals will offer this service due to potential insurance policy limitations.
“Some in the accounting and tax profession are not going to offer this service to their clients because the errors and omission policies these firms have will not cover these services,” Harris explained. “We are already seeing companies pop up that claim to be specialists in this area. If a business wants to go in this direction, they should make sure they choose a legitimate firm with the proper expertise and reasonable fees that will stand behind their work.”
As a short recap, the Corporate Transparency Act:
- What it means: The Corporate Transparency Act (CTA), which went into effect on January 1, 2024, may require small businesses to report information about ownership to the government. This law aims to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.
- Why it matters: The CTA will impact millions of small businesses across the U.S. Knowing the intricacies of this act and its potential impact is essential for small businesses. Otherwise, they may incur criminal or civil penalties for not filing or updating this report.
Congress Contemplating Business and Child Tax Breaks
Businesses hopeful for the revival of expired research and investment tax breaks may find encouragement in the possibility of a deal materializing this month. Despite the commencement of a new tax year, both Republicans and Democrats express optimism about reaching a $100 billion tax agreement in time for businesses to benefit from the breaks during the 2023 tax filing season.
A potential agreement between Senate Democrats and House Republicans would entail a retroactive renewal for 2023 of a lapsed research and development break, a deduction for certain types of interest, and an expanded “bonus” depreciation for investments like equipment.
Democrats are aiming to include an expanded child tax credit in the package and point to positive signs in ongoing discussions between Senate Finance Committee Chairman Ron Wyden and House Ways and Means Chairman Jason Smith. Any deal between the chairmen is expected to receive backing from party leadership, as they remain in constant communication.
The tax-writing committees are engaged in productive bipartisan discussions, and there is optimism that an agreement can be reached in time for the upcoming filing season, according to Senate Finance Committee spokesman Ryan Carey.
Extending the business tax breaks through 2025 would incur a cost of approximately $47.4 billion over a decade, as estimated by the Joint Committee on Taxation. Democrats aim to match this amount with spending on the child tax credit.
While Democrats generally support an expanded child tax credit, Republicans have reservations, advocating for work requirements and expressing concerns about the associated costs. Democrats signal a willingness to compromise on the credit, provided the cost aligns roughly with the business breaks.
Discussions continue on how to fund this approximately $100 billion package, with a likely option being the reduction of other tax breaks. An unpredictable element in the negotiations involves the potential removal of the $10,000 cap on the state and local tax deduction, a matter Speaker Mike Johnson has committed to addressing in any tax package.
Even if a deal is reached, uncertainties persist about the essential legislation to which lawmakers could attach it for accelerated approval. One possibility is attaching it to a spending package needed to prevent a partial government shutdown after January 19.
The business tax package remains a top priority for industry groups such as the Business Roundtable and the US Chamber of Commerce, with influential companies like Microsoft, Ford, Lockheed Martin, and Boeing actively advocating for its renewal.
Building Blocks of Success: IDOT announces January dates for Disadvantaged Business Enterprise program workshops
The Illinois Department of Transportation is hosting free virtual workshops in January as part of its continuing Building Blocks of Success series for Disadvantaged Business Enterprise firms interested in strengthening their skills, growing their business and bidding on state projects. New and existing DBEs, as well as firms interested in becoming certified in the program, are invited.
January workshop dates and topics:
- Jan. 11, 10 a.m. to noon: Capital and Lending Series – Advanced Banking (Underwriting Process)
- Jan. 16, 10 a.m. to noon: Capital and Lending Series – Improving your Personal and Business Credit Score
- Jan. 18, 10 a.m. to noon: Capital and Lending Series – What Banks Look For/How to
- Connect with Lenders
- Jan. 23, 10 a.m. to noon: Bonding and Insurance – Advanced Insurance and Bonding (Underwriting)
- Jan. 25, 10 a.m. to noon: Bonding and Insurance – Insurance, Bonding and Risk Management for Construction Firms
- Jan. 30, 10 a.m. to noon: Marketing and Networking Series – Business and Strategic Plans Q&A
Building Blocks of Success will continue through April. Workshop information, including dates and times, is available through Eventbrite at bit.ly/DBEworkshops. Advance registration is required.
Questions can be directed to IDOT’s Bureau of Small Business Enterprises at (217) 785-4611.
Through Gov. JB Pritzker’s historic, bipartisan Rebuild Illinois, IDOT is helping to deliver the largest capital program in state history while promoting diversity, equity and inclusion.
Administered by IDOT, the DBE program provides minorities, women and eligible small businesses with opportunities to participate in federally and state funded highway, transit and airport contracts. For more information on becoming a certified DBE and learning more about available IDOT resources, visit www.idot.illinois.gov/dbe.
Illinois Back to Business New Business Grant Program (B2B NewBiz)
Illinois B2B NewBiz will provide financial relief to businesses that started during the pandemic in the industries most impacted by the pandemic. Businesses that started during the pandemic have not been eligible for state grants and most federal emergency support provided for emergency relief to small businesses thus far.
Eligibility Requirements
To be eligible for a grant award under Illinois B2B NewBiz, for-profit businesses and nonprofit organizations must meet all the criteria listed below:
- Started operations between January 1, 2020, and December 31, 2021.
- Had gross receipts of at least $25,000 and up to $20,000,000 in 2021 (annualized if started during 2021).
- Currently active operations in Illinois.
- Have not received a Back to Business (B2B) grant prior to 2023.
- Business Interruption Grant (BIG), Back to Business (B2B) Grant issued prior to 2023, Shuttered Venue Operators Grant (SVOG), or Restaurant Revitalization Fund Grant (RRF).
- Must meet one of the following two criteria:
- The business or nonprofit is in a priority industry as defined for the previous Back to Business program
- A list of priority industries and their definitions can be found here.
- The business is majority owned by an individual or individuals that became eligible for and received unemployment insurance benefits – including from Pandemic Unemployment Assistance (PUA) – between March 13, 2020, and the date the business began operations.
- The business or nonprofit is in a priority industry as defined for the previous Back to Business program
Application Window Opens: November 30, 2023, at 9:00 a.m. CT.
Application Window Closes: January 11, 2024, at 11:59:59 p.m. CT.
Full information and forms can be found at https://b2bnewbiz.com/
Stay well,
Mike Paone
Executive Vice President
Joliet Region Chamber of Commerce & Industry
mpaone@jolietchamber.com
815.727.5371 main
815.727.5373 direct