This post serves to notify our clients of a significant change in federal law that will impact nearly everyone operating a business through a legal entity such as a corporation, limited liability company, limited partnership, or other similar entity.
Effective January 1, 2024, the Corporate Transparency Act (“CTA”) will require certain entities that qualify as a “reporting company” to report the names and other personal information of its “beneficial owners” and “company applicants” to the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) pursuant to a beneficial ownership information report (“BOI Report”). These reporting requirements may pertain to your entity’s obligations, even if established simply for tax or estate planning purposes.
FinCEN began accepting initial BOI reports electronically on January 1, 2024. All reporting companies created or registered before January 1, 2024, are required to report to FinCEN by January 1, 2025. Reporting companies created or registered on or after January 1, 2024, are required to report to FinCEN within 90 calendar days of receiving an actual or public notice from the secretary of state or similar office that the company has been created or registered. Reporting companies created or registered on or after January 1, 2025, are required to report to FinCEN within 30 calendar days of receiving an actual or public notice from the secretary of state or similar office that the company has been created or registered. If at any time a reporting company discovers an inaccuracy in a previously filed report, or if there is a change to previously reported information, the reporting company must file an updated or corrected report with FinCEN within 30 calendar days.
Clients may refer to FinCEN’s CTA Small Business Compliance Guide and Fact Sheet for more detailed information. Information about the reporting requirements, including answers to questions such as “is my company required to report beneficial ownership information to FinCEN,” “who is a beneficial owner,” and “when do I need to report my company’s beneficial ownership information” is made available on FinCEN’s BOI Reporting webpage.
Gordon Davis Johnson & Shane, PC will not be reporting the required information to FinCEN on a client’s behalf unless specifically engaged to do so under a separate written agreement. THEREFORE, UNLESS OTHERWISE PROVIDED, THE RESPONSIBILITY TO ENSURE COMPLIANCE WITH THE CTA, INCLUDING THE INITIAL BENEFICIAL OWNERSHIP INFORMATION REPORT DUE, FALLS ON EACH CLIENT’S ENTITY. If your entity wishes to engage our firm for advice or services related to CTA compliance, please reach out to us to discuss a separate written agreement covering such services.
It is important to note that failure to comply with the CTA can result in significant penalties, including substantial fines and potential criminal charges.
Further, there have been a number of recent attempts by scammers to fraudulently solicit information from entities and individuals that may be subject to the CTA’s reporting requirements. Scammers will typically send an email or letter claiming to be from FinCEN and asking the recipient to scan a QR Code or click a URL to comply with CTA reporting requirements. FinCEN does not send unsolicited information requests. If you or your business receives any such email or letter, it is fraudulent, and you should not send any response or interact with any URL or QR code included in the correspondence.
We appreciate your understanding and cooperation in this matter. Please feel free to contact us if you have any questions or need further clarification.
