Q: My parents founded our travel agency a half-century ago. In ARC's records, they are still listed as the owners, even though they both passed away years ago and left the business to me. I know that I should have filed an ARC application for approval of change of ownership years ago, but I just never got around to it because, among other reasons, I would have had to become an "ARC Specialist" by passing an exam, which I don't want to take. Recently, ARC sent me an ownership verification form, and since I didn't want to lie, I listed myself as the current owner. Now, ARC has sent me a letter stating that I must file a change-of-ownership application within 30 days or it may cancel my ARC appointment. I see that the application requires the signature of the outgoing owners, but that's impossible to get in my case. I'm afraid ARC is going to cancel me because I don't see a way out of this mess. Have you heard of this problem before, and if so, what do you advise?
A: Yours is a fairly common problem. It has a solution, and my advice is to stop worrying.
If you inherited the shares of stock in a corporation or the equity interest in a limited liability company, you need to file a Type II ownership change application. The application fee is $1,150, which is hefty, but there is nothing you can do about it.
According to Tanya Conklin-Whitehouse, a consultant who helps with ARC and Iatan change applications, in lieu of having the old owners sign, ARC will require documentation confirming the deaths, such as death certificates, and the legal transfer of ownership, such as a copy of a will.
Tanya also advises that, if the will is still in probate, an executor can sign on behalf of a dead owner. If there is no will, you can obtain a court document indicating that you are the heir. If the shares have already been transferred and you hold 100% of them, ARC may let you sign as both the current and proposed owner.
If you formed a new entity to take over the assets of the agency, you have to file a Type V ownership change application to get the transfer approved, in which case you need much the same paperwork and a very large fee of $2,300.
If you sell the agency, you could submit an application for ARC approval of the transfer to the buyer even before you are listed as the existing owner. The same documents will be required, and you may be able to sign as the current owner.
If you can't get all this paperwork together within ARC's 30-day deadline, you can probably get an extension, as long as you can explain that you are making some progress. Although ARC likes to process these applications as quickly as possible, some change applications have taken a year or more due to the applicant's slowness.
Of course, you or somebody at your agency will have to study for the ARC Specialist exam and take it before the change application will be approved. Again, though, I wouldn't worry, since you can take the online course anytime for $450.
Incidentally, I do not handle the paperwork of these applications myself but instead refer them to Conklin-Whitehouse. Her contact information is at www.whitehousetravelconsulting.com.
ARC has no interest in canceling your agency just because someone died. If you do what it asks, fill in the forms truthfully and pay the money, you will come out all right.