New Federal Reporting Requirement with Jan 1st Deadline
In 2021, the US Congress enacted the Corporate Transparency Act to limit illegal finance. This law requires many US companies to report information about who owns or controls the company. What does this mean for you? Who has to report?Companies required to report are called reporting companies. There are two types of reporting companies:
So even if you aren't an LLC, if you were required by your state to register to do business with your County clerk or Secretary of State office, then you are required to report. BUT filing a document with a government agency to obtain an IRS employer identification number, a fictitious business name, or a professional or occupational license does not make a sole proprietorship filing such a document a reporting company. What do I have to report?A reporting company will have to report:
A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report. For each individual who is a beneficial owner, a reporting company will have to provide:
What is the reporting deadline?All business entities in existence before January. 1, 2024 have until January 1, 2025 to file the new Beneficial Ownership Information (BOI) report. This filing requires you to report personal information about the business' beneficial owners to the Financial Crimes Enforcement Network (FinCEN) which is a department of the US Department of Treasury. Companies created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective. Companies created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective. Filing is straightforward and free online at www.fincen.gov/boi. What happens if I don't report or miss the deadline?As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information. If you correct a mistake or omission within 90 days of the deadline for the original report, you may avoid being penalized. However, you could face civil and criminal penalties if you disregard your reporting obligations. The application doesn't take long, and isn't involved, but it is crucial as the fines are steep! |