Starting a new business can be scary enough, and the last thing that any new business owner wants is trouble with the government. Unfortunately, scammers know all this too well and two scams have plagued new LLC owners (and owners of other corporate entities like nonprofits) for quite some time. If you are opening a new business, keep your eyes out for these two scams:
Form 4022, Form 5102 and Other FinCEN Impostors
On many occasions, the authors here at the Farm Law & Tax website have written about the Corporate Transparency Act (CTA). To be clear, the beneficial ownership information (BOI) reporting requirements are legitimate, though subject to some litigation that we have covered.
Regardless of how that litigation plays out, FinCEN (the government agency that enforces the CTA) does not charge a filing fee. FinCEN also does not send mail requesting a filing fee. FinCEN has put out a notice on their website advising business owners to avoid clicking on links that lead to suspicious websites and to avoid emails with suspicious attachments.
The scammers sending out these fraudulent notices often refer to themselves in their own documents as the "US Business Regulations Dept." To be perfectly clear, no such agency exists.
"Certificate of Existence" Scam
This scheme has taken on a few different names over the years and in each state, but the latest iteration is requesting new business owners to file a form certifying the business' existence. Of course, that form requires a filing fee to be paid to some fraudulent actors who almost certainly will never be caught.
The North Carolina Secretary of State published a notice warning business owners about this scam, and included a sample of what that correspondence often looks like.
How are these scammers getting your information?
When you start a business in North Carolina (or any state, really), the North Carolina Secretary of State posts that business' name, address, and other information onto their website's business search function. The website's business listing serves a myriad of other, more legitimate purposes, but scammers know that the information is out there. By spamming the mailing list with these fraudulent notices, the scammers realize that eventually, they'll dupe somebody into giving some of their hard-earned money over to them.
How can you keep up to date on the latest scams?
In addition to subscribing to the Farm Law & Tax website, the North Carolina Secretary of State keeps a running list of common scams that are aimed at new business owners. Though no website could ever include a comprehensive list of all scams, the North Carolina Secretary of State is a great resource for North Carolina business owners.
