Beginning in 2024, the Corporate Transparency Act created a new beneficial ownership (25% or more) reporting requirement as part of the U.S. government’s efforts to make it harder for corrupt or dangerous individuals from hiding or benefitting (i.e. money laundering) through shell companies or other opaque ownership structures.
As such, the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) will be implementing new reporting requirements beginning January 1, 2024, for all business entities registered with the Secretary of State. This will include most corporations and LLCs unless they qualify for one of the limited exceptions provided by the Corporate Transparency Act.
Information to be reported includes information about the entity such as:
- Company Name and/or any assumed names
- Address
- State of Organization
- Employer Identification Number
Information to be reported included information about individuals with a beneficial interest in such entity such as:
- Full name
- Address
- Birthdate
- Social Security Number
- Copies of identification (i.e. driver’s license or passport)
All reporting entities in existence and organized prior to January 1, 2024, will have one year, or until January 1, 2025, to complete its initial report. All reporting entities organized after January 1, 2024, will have 30 days from the date of registering with the State to complete its initial report. You will also need to update this report if there is any change in information.
If you are required to report an entity’s beneficial ownership information, you will do so electronically through a secure filing system available via FinCEN’s website. FinCEN will begin accepting beneficial ownership information reports on January 1, 2024. Failure to submit a required report may result in civil and criminal penalties. These penalties can be as much as $500 per day the violation is not addressed, criminal fines of up to $10,000, and imprisonment of up to two years.
Because this Act is not part of the Tax Code and advising clients regarding compliance with the Act may be considered unauthorized practice of law, we strongly urge you to consult legal counsel for determining your reporting compliance.
If you have questions, please feel free to contact one of our CPAs at (616) 642-9467 or request a complimentary accounting consultation
By: Joe Turnes
Photo: atlasobscura.com/places/truth-or-consequences Ella Morton
