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SWACCA Submits Comments Detailing How Beneficial Ownership Data Can Be Used to Fight Employee Misclassification

The Signatory Wall and Ceiling Contractors Alliance (SWACCA) submitted comments on the Advanced Notice of Proposed Rulemaking (ANPRM) issued by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) entitled “Beneficial Ownership Reporting Requirements.”

In its comments, SWACCA notes that using the new beneficial ownership data FinCEN will collect on corporations and LLCs to the maximum extent possible to investigate serious tax and payroll fraud through misclassification is critical to the survival of SWACCA’s contractors. This is relevant to implementation of the Corporate Transparency Act to the extent that perpetrators of these schemes intentionally use layers of LLCs to avoid detection and liability for their actions.

SWACCA highlights that, in its experience, federal, state, and local tax, labor, unemployment insurance, and workers’ compensation investigators are significantly hindered by the time and effort it takes to sift through trails of defunct LLCs to assign ultimate financial responsibility for unpaid taxes, overtime, unemployment insurance, and workers’ compensation premiums. SWACCA notes this allows these bad actors to get work under government contracts despite past performance reporting systems used by many government contracting agencies. While the CTA will require the disclosure of beneficial ownership information in relation to federal contract solicitations, SWACCA states FinCEN should also provide the information to state and local contracting agencies to help them avoid including perpetrators of serious tax fraud and wage theft through misclassification in their contractor community.

SWACCA’s comments also highlight that SWACCA affiliates that are 501(c)(6) organizations should be exempt from this reporting regime and makes suggestions on how exemptive relief for employers over certain income and employee thresholds should be interpreted so that seasonal and project based industries, like construction, are eligible for the reporting exemption.

You can read the comment letter in its entirety here.

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