In 2024, a stringent new filing requirement takes effect under the Corporate Transparency Act. The act compels all qualifying small businesses to disclose certain identifying information on “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN).
Penalties for noncompliance are extremely steep, so we are strongly urging all our clients to make CTA compliance a priority. Please read through the compliance guide on your own, or plan to work with an attorney to gather the required information, complete the BOI report, and then submit to FinCEN prior to the January 1, 2025 deadline. Due to the legal complexity involved, we are not currently able to provide this service, but please feel free to contact your Client Manager with questions.
While existing businesses set up prior to 1/1/24 don’t need to file under the new CTA rules until 1/1/25, new businesses established after 12/31/23 have a much shorter window to comply. The revised rules give new businesses set up in 2024 only 90 days to file. Starting in 2025, new businesses only have 30 days to file. For that reason, please ensure that the lawyer who is setting up your new business will take care of this time-sensitive filing as part of the services they are providing.
Effective January 1, 2024, the Corporate Transparency Act (CTA) establishes a new filing requirement for small business. Qualifying businesses must file a Beneficial Owner Information (BOI) report with Financial Crimes Enforcement network (FinCEN), a bureau under the Department of Treasury. According to the bureau’s website, the expectation is that nearly all small businesses will meet the criteria and must file (Beneficial Ownership Information Reporting FAQS).
Information on the reporting company itself that must be disclosed in the BOI report filing:
- Full name of the reporting company
- Any trade name or ‘doing business as’ name of the reporting company
- Business street address of the reporting company
- State or Tribal jurisdiction of formation of the reporting company
- IRS TIN of the reporting company
And for each beneficial owner identified, the reporting company must provide:
- Full legal name, date of birth, current residential or business street address
- Unique identifying number from an acceptable identification document
- Image of the identifying document (Federal Register :: Beneficial Ownership Information Reporting Requirements)
Entities registered before January 1, 2024 have one year to file initial reports. Entities registered during 2024 will have 90 days from notice of registration to file. Penalties for reporting violations are severe, $500 per day reaching up to $10,000 in fines and up to 2 years imprisonment for criminal violations.