To prevent illicit business practices like money laundering, the Corporate Transparency Act has created a new, mandatory reporting requirement for most small businesses, beginning January 1, 2024. The form will be sent to FINCEN, (Financial Crimes Enforcement Network), a branch of the Treasury Department. The form, which has not been released yet, requests the identifying information of the beneficial owners of certain entities. A beneficial owner is someone who either exercises substantial control over the reporting entity, or owns 25% or more of ownership interests in the reporting entity. Failure to file will result in severe penalties which include a $10,000 fine and up to two years in jail.
Affected entities, both foreign and domestic, include most small corporations, LLCs, LLPs, limited partnerships, business trusts or other domestic entities whose existence is dependent upon filing a formation or registration document with a domestic Secretary of State or Indian Tribe. Entities that are exempt include banks, and corporations that have $5,000,000 or more in gross and 25 or more employees.
Entities formed as of December 31 2023 will have until December 31, 2024 to submit the required information to FINCEN. Any new entities created after December 31, 2023 will only have 90 days to file the form with FINCEN. Additionally, existing entities will have to notify FINCEN of any change in ownership (more than 25%) resulting from an acquisition, merger, partial dissolution, gift death, etc.
As of January 1, 2024 they can be filed online at https://www.fincen.gov/boi.
We are now available to file these reports on your behalf if you would like assistance, please feel free to call our office number 541-689-7071.