New Corporate Transparency Act Reporting Requirements

New Corporate Transparency Act Reporting Requirements

 

Beginning January 1, 2024, a significant number of businesses will be required to comply with the Corporate Transparency Act (“CTA”).  The CTA was enacted into law by the Federal Government as part of the National Defense Act for the fiscal year 2021.  The CTA requires the disclosure of the Beneficial Owner Information (“BOI”) of certain legal entities from people who own or control a company.

 

Approximately 33 million existing businesses are required to comply with the CTA reporting requirements.  The goal of the CTA is to help U.S. law enforcement with monitoring money laundering, terrorism financing, and other illegal activities.  The reports required to be filed by businesses will be filed with the Financial Crimes Enforcement Network (“FinCEN”), which is an agency of the Department of the Treasury.

 

Who must comply with the CTA? 

Companies formed in both the United States and outside the United States may be required to report under the CTA.  Companies include limited liability companies, corporations, or other companies established by the filing of documents with the Missouri Secretary of State.

 

Companies exempt from reporting.

A company is exempt from reporting if:

  1. the company employs more than twenty (20) full-time (30 hours or more) employees;
  2. the company has reported gross revenue (or sales) of over Five Million Dollars ($5,000,000.00) on the prior year’s tax return; and
  3. the company is physically present in the United States.

 

What information must be reported?

The CTA requires that information about the Beneficial Owners of a company be reported.

 

Who is a Beneficial Owner?

Any individual who, either directly or indirectly:

  1. owns or controls at least twenty-five percent (25%) of the ownership interests of a company; or
  2. exercises “substantial control” over a reporting company.

 

When must a company file a report?

  1. Any entity which exists as of January 1, 2024 must file reports by January 1, 2025.
  2. Any entity created after January 1, 2024 must file reports within thirty (30) days.
  3. Any company that has had changes to previously reported information, or that discovers inaccuracies in previously filed reports, must file new reports within thirty (30) days.

 

What information is required to be reported?

  1. Information on anyone who meets the definition of a Beneficial Owner must report their name, address, birthdate, and a unique identifying number and issuing jurisdiction from an acceptable document (e.g. passport or driver’s license) and provide a copy of the document.
  2. The company must report the company’s full name, any doing business as (DBA) or trade names, business address, State of formation, and IRS Taxpayer Identification Number (TIN).

 

What if I do not comply?

Penalties for willfully not complying with the BOI can result in criminal and civil penalties of Five Hundred Dollars ($500.00) per day and up to Ten Thousand Dollars ($10,000.00), with two (2) years of jail time.

 

 

For questions about compliance with the CTA for your business, contact the attorneys at Reynolds and Gold Law 417-883-7800.