Under the updated Corporate Transparency Act (CTA), effective from January 1, 2024, specific reporting requirements apply to most organizations operating in the United States, including LLCs. These requirements, overseen by the Financial Crimes Enforcement Network (FinCEN), encompass three primary categories:
1. Reporting Companies: These include domestic entities such as corporations or LLCs formed by filing a form with a secretary of state or similar office, and foreign entities formed under foreign laws but registered in any U.S. state to conduct business. Exceptions include SEC-reporting companies, regulated financial service and insurance companies, inactive entities formed before 2020, common law trusts, and large companies with over 20 full-time U.S.-based employees, a physical operating presence in the U.S., and more than $5 million in gross receipts on their annual federal tax return.
2. Beneficial Owners: Defined as individuals who either directly or indirectly own at least 25% of a Reporting Company or exercise substantial control over it. Required disclosures for Beneficial Owners include their legal name, date of birth, residential address, and identification documents.
3. Company Applicants: These are individuals primarily responsible for directing or controlling the filing of a Reporting Company’s organizational documents, such as a lawyer or paralegal. Each Reporting Company can have up to two Company Applicants, and the required disclosures include their legal name, date of birth, residential address, and identification document. Company Applicants can also apply for a FinCEN Identifier as an alternative to direct disclosure.
All new Reporting Companies formed on or after January 1, 2024, must file these disclosures within 90 days of formation. Existing Reporting Companies created before this date must file by January 1, 2025. After the initial filing, all Reporting Companies, Beneficial Owners, and Company Applicants are required to report any changes to their disclosures within 30 days of the change.
To report beneficial ownership information under the Corporate Transparency Act to the Financial Crimes Enforcement Network (FinCEN), follow these steps:
1. Electronic Submission: The reporting must be done electronically through a secure filing system on FinCEN’s website. This system is currently under development and will be available before the reporting requirement comes into effect.
2. Form Availability: The specific form for reporting beneficial ownership information is not yet available but will be posted on FinCEN’s beneficial ownership information webpage once it is ready.
3. Assistance from Professionals: While not mandatory, reporting companies can seek assistance from professional service providers such as lawyers or accountants if they need help in meeting their reporting obligations.
4. Information to be Reported:
– For companies created or registered on or after January 1, 2024, you need to report information about the company itself, its beneficial owners, and its company applicants.
– For companies created or registered before January 1, 2024, you only need to provide information about the company and its beneficial owners.
5. Reporting Company’s Information: This includes the company’s legal name, trade names, the address of its principal place of business, its jurisdiction of formation or registration, and its Taxpayer Identification Number (TIN) or a foreign tax identification number if applicable.
6. Information about Beneficial Owners: For each beneficial owner, report their name, date of birth, residential address, and identifying number from an acceptable identification document (e.g., passport, U.S. driver’s license). An image of the identification document must also be included.
7. Information about Company Applicants: For each company applicant, report their name, date of birth, address, and an identifying number from an acceptable identification document. Like beneficial owners, an image of the identification document is required. If the company applicant works in a corporate formation, their business address should be reported; otherwise, the residential address is needed.
Keep in mind that this process and requirements are subject to change as the system is still being developed, so it’s advisable to regularly check FinCEN’s website for the latest updates and guidance.
Joseph F. Botelho, Esq.
BOTELHO LAW GROUP
Attorneys At Law
901 Eastern Ave.
Fall River, MA 02723