JANUARY 2024 MEMORANDUM
BENEFICIAL OWNERSHIP INFORMATION REPORTING
CORPORATE TRANSPARENCY ACT
One of the unique and often attractive features of a Limited Liability Company can be anonymity. In most states, formation and registration of an LLC does not require disclosure of the owners or officers. For various reasons, legitimate and not so legitimate, the owners of a business may not want to broadcast their ownership. Whether there are genuine concerns regarding privacy and nefarious desires to avoid civil and/or criminal liability, people have availed themselves of this feature. As such, it can be difficult to identify assets to enforce judgements or confirm net worth in the civil context. Additionally, it can be difficult to trace financial and criminal wrongdoing to the actual bad actors.
The Federal Government has decided to make things a little easier for itself by creating the Financial Crimes-Enforcement Network or FinCEN. Try saying that five times fast! In summary, the U.S. Treasury Department will require the vast majority of LLCs along with C and S corporations to report specific information about the business. This will include information identifying the ownership of the company. This is not necessarily a new thing for the shareholders of S and C corporations, but this will be a big change for the members of LLCs.
Authority United States Department of the Treasury
Corporate Transparency Act (31 USC 5336(b))
Financial Crimes Enforcement Network (FinCEN) Rule
Deadline January 1, 2024-January 1, 2025 for entities formed before January 1, 2024
Within 30 days of formation for entities formed on or after January 1, 2024
Who Must Comply Any entity that had to file a formation document with a state authority as part of its
formation or registration as a foreign entity doing business in the United States.
YES–Corporations (C, S, B and P), Limited Liability Companies, Limited Partnerships, Limited Liability Partnerships.
NO—Sole Proprietors, General Partnerships.
Exemptions 23 Categories of Exemptions and Exceptions to the rule, including inactive entities, nonprofits, entities that are already subject to federal reporting and regulations, financial institutions, and government entities.
Corporate Information Legal Name
Trade Names or D/B/A Names
Ownership Information Beneficial Owners. Owners with at least 25% ownership or who have substantial control the company directly or indirectly.
Driver’s License, State ID, or Passport Number
- Beneficial Corporation
- Professional Corporation
- May depend on the state formation requirements for LPs and LLPs
Picture of said ID
Duty to Update Within 30 days of any change or need to correct information.
Failure to Comply Civil liability $500/day
Criminal penalty up to $10,000 and/or 2 years in jail
Small Business Guide
Book a Consultation for us to assist you in determining whether your company needs to comply and provide guidance on the process.
Have SLG handle your reporting for you for a flat rate of $450 (bulk rate available for multiple entities), this includes any updated reporting for the calendar year (up to 3 updates)
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