The Corporate Transparency Act - (CTA - 24) What You Need to Know

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The Corporate Transparency Act - (CTA - 24)

What You Need to Know

Starting January 1, 2024, a significant number of businesses will be required to comply with the Corporate Transparency Act (CTA). The CTA requires the disclosure of the beneficial ownership information (otherwise known as “BOI”) of certain entities from individuals who own or control a company. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN) https://www.fincen.gov/.

This law affects many small businesses and legal entities. The law requires the reporting of detailed information about individuals affiliated with these companies, who ultimately own and/or control them. Please understand: IGNORING the filing requirements will result in severe punishment, including fines of $591 for each day of noncompliance (as of 2024, and annually inflation adjusted), up to $10,000, and up to two years imprisonment.

What is Reported to FinCEN?

Certain sensitive identifying information including social security numbers, driver license numbers, and passport numbers are reported for each person deemed to directly or indirectly own or control a company (“Beneficial Owners”). You will report Beneficial Ownership Information (BOI) through a portal on the FinCEN website.

This link to FinCEN FAQs is important to understanding subject entities, which individuals affiliated with the entity must have BOI details reported, and deadlines. There are still many questions outstanding, so we recommend revisiting the FAQs periodically to stay in compliance. For example, if a beneficial owner’s address changes, or a driver’s license is renewed, will updated filing be required? Right now, the answers to these questions are unknown.

Which Entity Types Drive BOI Reporting?

In general, legal entities that have registered their existence with the Secretary of State are the starting point. A small business that is incorporated or is a limited liability company is an example of a legal entity that is registered and potentially subject to BOI reporting.

This is a law that impacts small businesses. In general, entities with less than $5 million of income are subject to reporting BOIs.

What are Deadlines?

As of the date of this client alert:

· Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.

· Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.

Scam Alert:

You may receive email and snail mail from fraudsters who will attempt to collect information from you under the guise of compliance with the CTA and FinCEN. Correspondence may be titled “Important Compliance Notice” and include instructions such as “click on this link” or “scan this QR code”.

FinCEN will NOT send unsolicited requests. Don’t be scammed!

Assure your bookkeeper and other essential practice administrative personnel are also warned of these efforts to steal personal information, which are predicted to be plentiful.

Legal Assistance:

Some clients may wish assistance in fulfilling their obligations for BOI reporting. At this time, third party assistance is considered the practice of law. Therefore, consult with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership information. Burzenski & Company, P.C. cannot practice law, and cannot file for you.

Remember: Beneficial Owners (Corporation shareholders, Limited Liability Company members, and individuals with significant control over companies) have sole responsibility for compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information.

If you have any questions, contact Burzenski & Company, PC at 203-468-8133.

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