There were some recent changes to the Corporate Transparency Act (CTA) that extends anti-money laundering laws and introduces new reporting requirements to FinCEN for many U.S. businesses, effective from 2024.
In other words, if you don’t meet the conditions of exemption, you’ll be required to report some important information by the end of the year, or risk being charged a steep penalty.
Here is what you need to know.
Who is Required to Report?
This applies to C corporations, S corporations, LLCs, and similar entities registered with any state's Secretary of State unless you meet all of the following conditions for exemption:
1. You have more than 20 full-time U.S. employees,
2. You have a physical office in the U.S., and
3. You generated over $5 million in U.S.-sourced gross receipts.
If you’re a sole proprietorship, a trust, or a general partnership, you should also be exempt.
What Information Must Be Reported?
The required information includes the full legal name, date of birth, address, and an identification number (from a U.S. or foreign passport, state driver's license, or other government-issued ID) of each beneficial owner.
Beneficial owners are defined as anyone owning at least 25% of the company or having significant control over company decisions.
When Do I Need to File?
Entities that registered before 2024, must submit their initial report by January 1, 2025.
Entities formed or registered in 2024 have 90 days post-registration to file.
New entities registering from 2025 onwards, must file within 30 days of formation.
Any changes in reported information must be updated within 30 days.
Penalties for willfully failing to file both initial and updated reports are steep-$500 per day that the report is late, with a cap of up to $10,000 and imprisonment for up to two years (eek!).
How Do I File This Information?
Reports must be filed electronically via FinCEN's e-filing portal. The filing can be done directly on the website or by uploading a completed PDF form. There is no fee for filing these reports.
Compliance Responsibility:
You may choose to complete the forms yourselves or to consult with a legal or tax consultant to ensure full compliance and to address any specific concerns regarding these new regulations. Either way, please be aware that compliance with the CTA and related filings, including gathering and reporting BOI, is not in Finaloop’s scope of service and is therefore your responsibility to complete. Non-compliance can lead to significant penalties, including fines and imprisonment.
For detailed information and assistance, FinCEN's Small Entity Compliance Guide and FAQs can be invaluable resources. They are available at FinCEN's BOI page.