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IMPORTANT NOTICE – NEW REPORTING REQUIREMENTS
We are reaching out to advise of new reporting requirements implemented pursuant to the Corporate Transparency Act (“CTA”), a federal law which came into effect on January 1, 2024. The CTA expands upon and/or creates an obligation to report certain ownership and financial information of all currently existing and newly created for-profit registered corporate entities, including, but not limited to, corporations, limited liability companies, limited partnerships, limited liability partnerships, and limited liability limited partnerships, (collectively, “Reporting Companies”).
Reporting Companies will need to prepare and file with the United States Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) certain personal and ownership information regarding the Reporting Company, including the following information: (i) the full legal name of the Reporting Company, including any trade names or other names of the Reporting Company which are used to conduct the business of the Reporting Company; (ii) the address of the Reporting Company’s principal place of business; (iii) the state or jurisdiction in which the Reporting Company was formed or established; and (iv) the unique identification number of the Reporting Company (i.e., the EIN or TIN)..
In addition, each Reporting Company will also need to report information on the Reporting Company’s Beneficial Owners. A Beneficial Owner is defined as anyone who (i) exercises “substantial control” over the Reporting Company; or (ii) owns or controls no less than 25% of the ownership interests in the Reporting Company. Substantial control is defined as anyone who: (i) serves as a senior officer of the Reporting Company; (ii) has authority over the appointment and removal of any senior officer or a majority of the board of directors (or a similar body) of a Reporting Company; (iii) directs, determines, or has substantial influence over the important decisions of a Reporting Company; or (iv) has any other form of substantial control over the Reporting Company. All Reporting Companies formed after January 1, 2024, must also report information on the Company Applicant. The Company Applicant is defined as the individual who directly filed the document which created the Reporting Company, or registered the Reporting Company to do business in the United States. The required Company Applicant information is the same information as the Beneficial Owner information defined above. The Company Applicant information reporting is not required for any entities formed prior to January 1, 2024.
All Reporting Companies in existence prior to January 1, 2024, must file an initial report with the required Reporting Company and Beneficial Owner information no later than January 1, 2025. For all Reporting Companies formed between January 1, 2024, and December 31, 2024, Reporting Companies currently have ninety (90) days from the date of formation to file their initial report containing the Reporting Company, Beneficial Owner, and Company Applicant information. All entities formed after January 1, 2025, will have thirty (30) days to file their initial report.
Initial reports must be filed through FinCEN’s Beneficial Ownership Secure System (“BOSS”) on the FinCEN website. If any Reporting Company or Beneficial Owner information changes after the initial report, the Reporting Company or Beneficial Owner must update the inaccurate information within thirty (30) days of the reported change, or within thirty (30) days from the date that the Reporting Company or the Beneficial Owner becomes aware of the inaccuracy in the report. All information submitted to FinCEN is to be securely stored through BOSS and should not be available to the public.
Please note that certain exemptions apply to entities that are already or have previously been subject to federal reporting requirements, including, but not limited to, banks, credit unions, insurance companies, security brokers, investment and venture capital fund advisers, accounting firms and certain “large operating companies” (as defined in the CTA).
Non-compliance with the reporting requirements in a timely manner can result in civil penalties of $500 per day for each day that the violation continues, up to a maximum of $10,000. The CTA may also impose criminal penalties in the event any person willfully provides FinCEN with false, fraudulent, or knowingly incorrect information, in which such penalties may result in criminal fines of up to $10,000, imprisonment, or both.
We recommend that you begin compiling the necessary Reporting Company and Beneficial Owner information so that you may file the initial report in a timely manner. As a reminder, the initial report for entities created before January 1, 2024, must be submitted to FinCEN prior to January 1, 2025. If you would like our firm to assist you in filing the initial report and in your continued compliance with the CTA, or if you have any questions regarding the new reporting requirements, please contact our office no later than thirty (30) days prior to the deadline to file your initial report.
For more information, please contact us at 920-430-1900.