This important communication is a courtesy to inform you and your business organization of new Federal reporting requirements that should be addressed by year-end (12/31/2024) to maintain compliance and avoid potentially large penalties. The new reporting requirements are not part of the investment and/or tax services that we provide to you.
The Corporate Transparency Act (“CTA”) reporting requirements went into effect on January 1, 2024, as part of the National Defense Authorization Act. The CTA is intended to guard against money laundering, terrorism financing, and other forms of illegal financing by mandating certain entities (primarily small and medium size businesses) report “beneficial owner” information to the Financial Crimes Enforcement Network (“FinCEN”).
Our firm is sending you this communication to provide you with some general information regarding the new reporting rules as well as provide you with a resource to help you address the implications of the CTA to your organization(s). The due date for filing the online report(s) are as follows:
- All new Reporting Companies — those entities formed on or after Jan 1, 2024 and before Jan 1, 2025 — must report required information WITHIN 90 DAYS after their formation or registration; those entities formed after Jan 1, 2025 — must report required information WITHIN 30 DAYS after their formation or registration.
- All existing Reporting Companies — those formed or registered before January 1, 2024 — must report required information NO LATER THAN January 1, 2025.
- After the initial filing all entities will have 30 days to update the filing for any changes to the information provided. (Note: there is no annual filing required if there is no change in the information provided)
Note that penalties for willfully violating the CTA’s reporting requirements include (1) civil penalties in excess of $500 per day that a violation is not remedied, (2) a criminal fine of up to $10,000, and/or (3) imprisonment of up to two years.
Entities required to comply with the CTA (“Reporting Companies”) include corporations, limited liability companies (LLCs), and other types of companies that are created by a filing with a Secretary of State (“SOS”) or equivalent official. A beneficial owner is generally any individual who, directly or indirectly, exercises “substantial control” or owns or controls at least 25% of the organization’s ownership interests.
Take immediate action now!
The CTA is not an income tax filing requirement under federal tax law. You can complete the required CTA filing online at https://boiefiling.fincen.gov. You will need your federal tax identification number and your drivers license to complete the online filing. The assessment and application of many of the requirements set forth in the regulations, may necessitate expert guidance and direction in complicated business structures. Our firm is not able to provide you with any legal determinations related to the CTA filing. Additional information on the new rules are available at the following websites; FinCEN’s Frequently Asked Questions document: https://www.fincen.gov/boi-faqs and https://www.harborcompliance.com/beneficial-ownership-information-reporting-service.
This link provides step-by-step instructions on how to file- https://www.youtube.com/watch?v=GydCvfbKxPw
As always, please feel free to contact us if you have any questions.