ShareFile Log-InThe Corporate Transparency Act (CTA), which goes into effect in January 2024, will require your business to report information about ownership to the Government.
The CTA is not a part of the tax code; instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), providing details identifying individuals who are associated with the reporting company.
Ouellette & Associates will not offer preparation services for the Beneficial Ownership Information (BOI) reports.
The beneficial Ownership Information (BOI) reporting takes effect January 1, 2024, although professional organizations have asked Congress to delay the implementation, you need to begin planning. FinCEN will begin accepting BOI filings on January 1, 2024.
What businesses are required to report?
All businesses (domestic and foreign) that are organized in the United States or have a physical presence in the United States. There are exemptions for certain industries and large businesses. Unless specifically exempted all businesses must file, including Corporations, S-Corporations, LLCs, Partnerships, and those owned by Trust/Estates. Tiered business structures can have reporting requirements for each tier.
What information is required?
FinCEN has not yet published the report format, but it is anticipated that each report will include business information such as legal name and physical address and Employer Identification Number. It will also include information for each beneficial owner such as name, address, copies of government issued identification, and more.
Who is a beneficial owner?
A beneficial owner is an individual who owns 25% or more of the business, or an individual who exercises “substantial control” over the business. The term “substantial control” is defined by the CTA and includes individuals who direct or have influence on decisions of the company. This can include individuals who do not have an interest in the company.
When are businesses required to report?
Business entities in existence before January 1, 2024, have until December 31, 2024, to register and file their initial Beneficial Ownership Information Report with FIN CEN.
Business entities formed on or after January 1, 2024, have 90 days from formation to register and file its initial beneficial ownership information report.
Any changes to the business or beneficial owners reporting information previously reported require an update to be filed within 30 days of such change.
What are the penalties for noncompliance?
Noncompliance penalties which are high. Civil violations include penalties of up to $500 per day until corrected and criminal violations include penalties of up to $10,000 and up to two years of imprisonment.
For more detailed information visit the FinCEN website at: https://www.fincen.gov/boi.
