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NEW 2024 Business Reporting Requirements

Beginning in 2024, most businesses must report their “beneficial ownership” (more on this below) to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). In a bid to enhance corporate accountability and curb illicit financial activities, FinCEN adopted the Corporate Transparency Act (“CTA”) which emerged as a landmark legislation in the United States. Enacted to address concerns surrounding money laundering, tax evasion, and terrorist financing, the CTA signifies a significant shift towards greater transparency in the corporate realm. Understanding its implications is crucial for business owners navigating the evolving regulatory landscape.

The Basics of the Corporate Transparency Act:

The CTA, which went into effect on January 1, 2024, requires that all corporations, limited liability companies, limited partnerships, foreign, and similar entities (LLPs, LLLPs and business trusts) created or registered to do business in the United States (“Reporting Company”) must submit a Beneficial Ownership Information (“BOI”) Report to FinCEN.

Required Deadlines

  • A Reporting Company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
  • A Reporting Company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
  • A Reporting Company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

Who Must Report?

  • The CTA requires that businesses disclose the following on the BOI report:
    • Full legal business name;
    • trade names or d/b/a names;
    • principal place of business (or, in the case of a foreign Reporting Company, its primary location in the United States);
    • State, tribal, or foreign jurisdiction of formation (and in the case of a foreign Reporting Company, the State or tribal jurisdiction where it first registers);
    • Jurisdiction of formation; and
    • Unique taxpayer ID number (which for a domestic entity must be a TIN (including an Employer Identification Number (EIN)); and for a foreign entity may be a similar, foreign unique identifier if the entity has no US TIN).
  • The CTA requires submitting personal information of every direct and indirect beneficial owner. A “beneficial owner” is an individual who either directly or indirectly: (1) exercises substantial control (see infographic “A” below) over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests (see infographic “B” below).
  • “Indirect owner,” is broad, and may involving multiple filings for each entity.

Contents of Report for Beneficial Owners

  • Each “beneficial owner” must provide the following on the BOI report:
    • Full Legal Name;
    • Date of Birth;
    • Current Address;
    • The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used; and
    • An image of the foregoing document.

Are there Exemptions?

  • Certain entities are exempt from reporting, including but not limited to: publicly traded companies meeting specified requirements, many nonprofits, accounting firms, governmental authorities, banks, credit unions, pooled investment vehicles, insurance companies and certain large operating companies and inactive entities. To learn more about exempt entities, please visit the following link: www.fincen.gov/boi-faqs.

What are the Penalties for Non-Compliance?

  • It is unlawful for any person to willfully provide (or attempt to provide) false or fraudulent Beneficial Ownership Information or to willfully fail to report complete or updated Beneficial Ownership Information.
    • Civil penalties include up to $500 for each day the violation continues.
    • Criminal penalties of up to $10,000, and/or possible imprisonment of up to two years for each violation.

If you have any questions or would like to learn more about the CTA and any reporting requirements, please contact The McHattie Law Firm. We’re more than happy and capable to assist with your reporting obligations.