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New Reporting Obligations for Privately Held Entities
Starting January 1, 2024, the Corporate Transparency Act ("CTA") may require your business entity (e.g., LLC, Corporation, LP, etc.) to file a report with the Financial Crimes Enforcement Network ("FinCEN") disclosing information about (1) the company and (2) its beneficial owners.
Please note these two key deadlines:
(1) Any existing entity (created before January 1, 2024) that does not qualify for an exemption must file a Beneficial Ownership Information Report (a “BOI Report”) no later than January 1, 2025.
(2) Any new entity (created on or after January 1, 2024) that does not qualify for an exemption must file a BOI Report within 30 days after the entity’s formation date.
Generally speaking, the CTA will require your entity to file a BOI Report containing information about its owners who own at least 25% of the entity or those persons who are considered to have substantial control over the entity, such as the entity’s executive officers. Information submitted about a person will require a copy of that person’s government issued photo I.D. BOI Reports will also require disclosure of information about the entity, including its full legal names, DBAs, and EINs, among other information.
Violations of reporting requirements include criminal penalties of up to $10,000 and/or possible imprisonment of up to two years, and civil penalties of not more than $500 per day.
An updated BOI Report will also need to be submitted within 30 days of any change to the information provided in a previously filed BOI Report.
The CTA was first enacted in 2021 in an effort to reduce illegal financing activities in the United States. FinCEN is the agency responsible for overseeing the implementation of the CTA and collecting and maintaining BOI Reports.
FinCEN is expected to release additional rules regarding the CTA later this year. Please let us know if we can be of any assistance in filing, or in determining if your entity will need to file, a BOI Report in 2024.
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