Attention clients, former clients, and blog readers who own corporations, LLCs, or who have an interest in a trust that owns an LLC or corporation: major changes have been enacted through the Corporate Transparency Act that may affect you. This blog provides a brief description of the Corporate Transparency Act, its requirements, and what the consequences are for those who fail to comply.
AS OF JANUARY 1, 2024, MANY COMPANIES IN THE UNITED STATES ARE REQUIRED TO REPORT INFORMATION ABOUT THEIR BENEFICIAL OWNERS TO THE FEDERAL GOVERNMENT.
Which companies are required to report?
Companies that are required to report beneficial owner interests are called reporting companies. Reporting companies include corporations or LLCs registered to do business in the United States. Reporting companies must report information about their beneficial owners to FinCEN, a bureau of the U.S. Department of the Treasury.
Who is a Beneficial Owner?
A beneficial owner is any individual who, directly or indirectly, exercises substantial control over a reporting company, or owns or controls at least 25 percent of the ownership interests of a reporting company. For a trust that holds an ownership interest in a reporting company, the grantor, the trustee, or even the beneficiary may be considered the beneficial owner.
What Information Needs to be Reported to FinCEN?
Beneficial Owner:
- Full legal name
- Date of birth
- Complete current address
- Unique identifying number and issuing jurisdiction from one of the following non-expired documents (must include an image of the document):
- U.S. Passport
- State driver's license
- Identification document issued by a state, local government, or tribe
- Foreign passport (if the beneficial owner has none of the above)
When Must the Report be Filed?
If the reporting company was created or registered to do business before January 1, 2024, the company has until January 1, 2025, to file its initial report.
If the reporting company is created or registered on or after January 1, 2024, and before January 1, 2025, the company will have 90 calendar days to file its initial report after receiving actual or public notice that the company’s creation or registration is effective.
Failure to Comply:
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may include civil penalties of up to $500 per day the violation continues, or criminal penalties of up to two years in prison and/or a fine of up to $10,000.
Lamson & Cutner, P.C. Can Help!
The requirements imposed by the Corporate Transparency Act can be difficult to navigate and there are severe consequences for those who fail to comply. If you own an LLC, a corporation, or have a trust that holds an ownership interest in one of these entities, our firm can help you stay compliant with this new federal law. Contact us today for a consultation!
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