Dear Client –
We hope this letter finds you well. We are writing to inform you about some important changes in federal law that could affect you and your assets, particularly if you’re involved with certain business entities. Recently, Congress enacted the Corporate Transparency Act (CTA) through the Anti-Money Laundering Act of 2020 to combat criminal activities like money laundering, tax fraud, and terrorism. It requires certain companies, known as “Reporting Companies,” to disclose information about the individuals who own and operate them. Please be sure to read this message carefully, as we do not plan on sending additional correspondence with respect to these matters.
Who Needs to Report
If you own or control a business entity like a Limited Liability Company (LLC), Limited Partnership (LP), Corporation, or similar entity, you very likely have new reporting requirements under the CTA. You need to determine whether the CTA applies to you or the entities with which you are associated. Certain companies do not have to report. You can find a list of exempt entities in the Small Business Entity Compliance Guide.
Reporting Requirements
In summary, if you own 25% or more of a small business entity, or if you exercise “substantial” control over the business, the entity (and potentially you) will be obligated to collect and report certain personal information about you to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury by January 1, 2025. This report includes details about the company’s beneficial owners, such as their legal names, dates of birth, addresses, and identification numbers. If you are required to report under several entities, then you may obtain a separate number called a FinCEN Identifier. If you obtain this number, you can report the number rather than the sensitive information.
Deadlines and Penalties
Failing to file the required Beneficial Ownership Information Report (BOIR) can result in significant penalties, including civil fines of up to $500 per day and criminal penalties of up to $10,000 and imprisonment for up to two years. Reporting Companies need to meet specific deadlines for filing their reports, depending on when the entity was formed.
Resources for Assistance
- This notice is a simplified summary of the notice. FinCEN has provided FAQs about the reporting requirement and guidance on completing the BOIR which you may find helpful in addition to the resources already listed herein.
Conclusion
According to the FinCEN website, a Reporting Company should be able to file their BOIR without engaging the services of an attorney or Certified Public Accountant.
For most of our clients with simple ownership structures, completing the reporting requirement on your own should not pose a problem. Given the difficulties involved in identifying all the entities and individuals who will have to report, we have determined that we lack sufficient resources to assist our clients in complying with the CTA. Even if we helped you create the Reporting Company, our information may be outdated or incomplete. For that reason, we do not accept the responsibility to attempt to obtain or provide information about any entity, to analyze whether any company qualifies as a Reporting Company, or to determine the Beneficial Owners of any Reporting Company. If you believe that the CTA impacts you, and if you find you need assistance with filing your report, you may contact us for a referral to others whom we understand will be performing such compliance work.
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