We posted about this back on January 11th of this year, but we continue to see countless clients who either are not aware of this new law, or (incorrectly) assume it doesn’t apply to them, or (incorrectly) assume we are just talking about their annual corporate/LLC filing with the Secretary of State. For that reason, and with the deadline fast approaching, we wanted to provide one final reminder….
If you own a business (including a single member LLC), this law APPLIES TO YOU, and it involves MANDATORY reporting requirements, with hefty civil FINES, and possibly CRIMINAL penalties, if you do not comply! This new law went into effect January 1, 2024. This is a MUST READ for any business owner.
Please note, as indicated in the opening paragraph above, this is something entirely different from the annual registration you pay to the Secretary of State!
This law requires informational reporting for nearly every small business entity: corporation, s-corporation, professional corporation, certain partnerships, and LLCs (yes, even single member LLCs!!; and yes, if you have more than one entity, a separate filing is required for each entity). This filing is commonly referred to as a BOIR (Beneficial Ownership Information Report) and is required by FinCEN (Financial Crimes Enforcement Network), which is an enforcement bureau of the U.S. Department of the Treasury.
The stated objective of the CTA is to prevent money laundering. It will do this by creating a national database of companies (LLCs, corporations, s-corporations, most limited partnerships, and even many general partnerships) and company owners. This database will not be available to the public, but will be available to certain law enforcement agencies. The CTA requires companies to report the personal identifying information of the company’s Beneficial Owners, as well as the person responsible for filing the company’s formation documents (the “Applicant”). For additional information and details on the CTA and the filing requirements, see our post from January 11, 2024: https://www.facebook.com/share/p/twbBENNYoHdFqD5n/
We can’t stress enough how important it is for you to complete this filing requirement, whether you do so yourself, or have your CPA, or your attorney, do this for you. The CTA provides for civil and criminal penalties for any business owner who fails to report as required. The business owner will be liable for a civil penalty of up to $500 for each day a violation continues or has not been remedied and may be fined up to $10,000 and imprisoned for up to two years, or both, for a criminal violation.
Entities that were in existence on January 1st of this year have until December 31, 2024 to file. (New entities created after January 1st, 2024 have only 90 days from the date of formation to file).