2024 Corporate Transparency Act
A new Federal law requires that all small business entities (termed a “Reporting Company”) officially report specific information about the Company and those involved in the Company. Thus, if you own or control an existing entity or establish a new entity, you must file a report. Companies required to report include corporations, limited partnerships, LLCs, LLPs, or other types of business entity, formed or registered to do business within any part of the U.S..
Reporting Companies that existed prior to 01/01/2024 have one year, until 01/01/2025, to submit their reports. Reporting Companies created now have 90 days from formation to file. Some larger companies are exempt. Failure to timely meet the reporting requirement can result in severe civil ($500 per day!) and possibly criminal penalties.
The Corporate Transparency Act ( the "CTA") went into effect 1/1/24 promulgated by the Financial Crimes Enforcement Network of the US Department of Treasury ("FinCEN"). The CTA’s purpose is to expose those who are involved in the movement and influence of “dark money” in the U.S, i.e. terrorist financing, money laundering, etc. hidden behind a business entity shell. Each Reporting Company must disclose detailed information about 25% or more owners, officers, managers, trustees and other controlling persons.
This is not a tax law and CPAs generally will not be helping clients with compliance. The IRS already has this info but cannot share it. Your government has done a poor job of publicizing the new requirement. They assume the new law and 4 page forms are easy to find and understand.
The filing is not required for an LLC, etc. that has no assets and is not operating, but the best practice is to report because if you ever use that LLC, you would then be in violation.
WHAT TO DO NOW.
To report, go to the website below and you be prepared to provide:
The entity name and tax ID number
State of formation and date of formation/registration
Entity address and, if different, business address
Information on certain persons defined as “Beneficial Owners” (oversimplified: those who are in charge of and/or who own 25% or more of the equity) including (i) full name(s); (ii) date(s) of birth; (iii) mailing address(es); (iv) ownership share(s) and/or position(s). You do not need to provide anyone’s SSN.
An uploaded copy of a photo ID for each Beneficial Owner.
You can find the form and submit your report here: https://www.fincen.gov/boi.
More information can be found at: https://www.fincen.gov/boi/Reference-materials.
We are ready to be engaged to assist clients to determine if compliance is required and to assist in submission of the report(s) required. There is a simplifying procedure for those who have to report for a number of entities.