Beginning January 1, 2024 most entities that register with a local Secretary of State will have additional federal reporting requirements, that if not met, carry significant financial and criminal penalties.

The Corporate Transparency Act (“CTA”) requires that certain information about an entity (usually a LLC for our purposes) file certain information about the business AND the owners with the Financial Crimes Enforcement Network (FinCEN) and the US Treasury Department.  For more detailed information, please see the attached memo.

Prior to the enactment of the CTA, the US was one of the countries with the least onerous filing requirements for legal entities.  With the enactment of the CTA we are now more in line with other financially developed countries in those requirements.

The scope of the law is very broad, and its requirements apply even to small family businesses and entities designed only to hold property such as real estate which conduct no active business.  The goal of the CTA is to create a national database of companies that can assist law enforcement in “…crack[ing] down on anonymous shell companies, [used by] money launderers, terrorists, and criminals.” 

We can argue that this new “net” is too fine and should not apply to “my single-member LLC” but nonetheless we need to comply currently.  Failure to comply is a felony and “any person violating the reporting requirements of the Corporate Transparency Act is liable for civil penalties of not more than $500 for each day that the violation continues and criminal penalties of imprisonment of up to two years and fines of up to $10,000.” 

What Needs To Be Disclosed:

Certain information about your entity will need to be reported as will certain information about you as the controlling member/owner.  

Company Information:

  1. The reporting company’s full legal name, 
  2. Any trade or “doing business as” names, 
  3. Complete current street address of the principal place of business, 
  4. Jurisdiction of formation, and 
  5. Taxpayer identification number.

Owner Information:

  1. Full legal name, 
  2. Date of birth, 
  3. Complete current residential street address, 
  4. Unique identifying number for the owner/controlling person and the issuing jurisdiction from either a current:
    • U.S. passport, 
    • state or local ID document, 
    • driver’s license, 
  5. An image of the document from which the unique identifying number was obtained.

Rather than filing all that information directly with FinCEN, you can obtain a Financial Identifier (with the same information) then just use that ID number on the actual business filing.  There is no charge for the filing or obtaining a FinCen ID.

If your entity was in existence before January 1, 2024, your deadline to file this information is December 31, 2024.  

We would like to get this taken care of earlier in the year rather than later.  We appreciate this is a significant change from prior “reporting” requirements.  We will work with you to the extent you wish.  If you wish for our assistance in any way, you will need to contact us and engage us to do so (via an engagement letter).  Please contact us to learn more.

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