Beginning January 1, 2024, the US Corporate Transparency Act (CTA) will require corporations, limited liability companies, limited partnerships, trusts and other similar entities to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau within the US Department of the Treasury. The CTA aims to enhance financial transparency and strengthen anti-money laundering efforts by detecting, preventing, and punishing terrorism, money laundering, and other misconduct through business entities.
Entities that were formed before January 1, 2024, will have to report by December 31, 2024. Any new company formed after January 1, 2024, will need to report within 30 days of the formation of the entity. Any change in beneficial owners or beneficial owner’s information will need to be reported within 30 days of the change. An example of a change that would need to be reported would be a change of address.
Company information to be reported:
- Full legal name
- All trade names, fictitious names or DBAs (regardless of whether the name is registered)
- Street address of the principal place of business
- Jurisdiction of formation (state or tribal)
- IRS taxpayer identification number (TIN)
Each reporting company must also provide information about its beneficial owners. A beneficial owner is an individual who directly or indirectly exercises substantial control over the reporting company or an individual who owns or controls 25% or more of the reporting company’s ownership interests. A beneficial owner does NOT include an employee who only acts as an employee. If a trust is a beneficial owner, the entity will need to provide information of the grantor who retains a right to revoke the trust, the trustee and any permissible beneficiary. Each beneficial owner will need to provide:
- Full Legal Name
- Date of Birth
- Residential Address
- Unique Government ID – Driver’s License, if none, Passport
For those beneficial owners with interests in multiple entities, it will simplify compliance by obtaining a FINCEN identifier at https://fincenid.fincen.gov. Once you obtain your identifier, the entity may use it to comply with the CTA and any change to the identifier will automatically update any entity using the identifier.
There is no filing fee, and you will only need to file the report once, however, if there are changes or corrections to the corporation or LLC information, an updated report must be filed with FinCEN within 30 days of the change.
If you do not file the necessary information within the allotted timeframe violators are potentially subject to civil penalties ($500 per day) and criminal penalties (imprisonment for up to 2 years and/or a fine up to $10,000). There are narrow exceptions to the law for large entities (20 or more employees), entities that are already regulated (such as a bank or securities firm) and inactive entities with no assets or income.
For more information about this new filing requirement please see https://www.fincen.gov/boi or contact DeAngelis Legal to schedule a time to meet and assist you to comply with the new law.