Dave Krawczyk
October 29, 2024
Tax
Corporate Transparency Act – Filing Requirement
The Corporate Transparency Act requires small and medium sized businesses created by filing paperwork with a Secretary of State (Corporations, LLCs, LLPs etc) to report identifying information by 12/31/2024 to the Financial Crimes Enforcement Network (FinCEN).
- Some exceptions include charities or companies with 20 or more employees, and $5M in annual revenue.
New Filing Obligations for the Corporate Transparency Act
- Purpose: to create a national database of companies in the U.S. that identifies the individuals behind those companies.
- Intended to combat money laundering, terrorism, tax evasion, and other financial crimes
- Closely held businesses will more than likely be required to file with FinCEN, there are several exceptions however (32 types of business are exempt in total).
- Estimated that 32 million entities will have to file with FinCEN.
What must be included in filings:
- Company Legal name and any DBA
- Tax Identification Number
- Image of identifying document from an issuing jurisdiction
Any companies required to file with FinCEN must report who their “Beneficial Owners” are
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- Beneficial Owner
- Own at least 25% of an entity, or “exercise substantial control over a reporting company”. Ex. a managerial position.
- Need to give the reporting entity their full legal name, DOB, home address, copy of US passport or state driver’s license.
Filing Timeline:
- All entities that existed before 2024, unless specifically exempt will have to file by 12/31/2024.
- Any new entities will have to file within 30 days of the formation.
- Any changes in ownership (address, took a new last name, new owner, owner leaving etc.) will have to be filed within 30 days.
Penalties for non-compliance are punitive (~$600/day per infraction, potential jail time)
If you believe you may be impacted by this legislation, please contact your attorney or CPA to discuss your filing requirements.