The purpose of this memorandum is to alert you of a new federal law call the Corporate Transparency Act (the CTA), which will impact almost all LLCs, corporations, and other entities that were created by filing a document with a secretary of state or similar office under the law of the state or Indian tribe. On January 1, 2024, a new federal reporting requirement called Corporate Transparency Act (CTA) law went into effect that requires businesses to file a Beneficial Ownership Information (BOI) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Please see below for a summary of this Act and action items if you are required to file:
What is it?
- The CTA is mainly an anti-money laundering law where Congress has authorized the Treasury’s enforcement wing (FinCEN) to understand who the people are behind each corporation or LLC. This is an act designed to lift the cover on who is in control of corporations and LLC’s to prevent those individual in using that entity as a front to facilitate money laundering, financing of terrorism, tax fraud, and other illegal acts.
- The good news for the business or LLC owner is that this is not an annual filing. But there could be additional filings necessary in cases of entity changes (changes in the entity formation due to sale, merger, death; change in ownership or officers; expired identification forms, change in address, etc.).
Do I need to File or am I exempt?
- Who needs to file?
- Every corporation, LLC, or entity that otherwise has to file with a Secretary of State or similar office when the entity was created, including foreign corporations doing business in the U.S.
- Here is a Link to the full list of 23 exemptions of entities that do not have to file, these include:
- Those subject to substantial federal or state regulation (public companies, government entities, banks, those under financial/accounting regulations in the finance & insurance industry, because they have separate filings already).
- Sole Proprietorships (not required to file, because their name is already revealed on their tax return)
- Tax exempt entities (like charities or private foundations)
How do I file?
- It’s easy to file and free. It will take you about 20 minutes online. You can visit https://boiefiling.fincen.gov/fileboir to complete this filing. You will provide information regarding the owners or those with beneficial interest (Driver’s License or passport & picture for upload, address, phone number) as well as the Tax ID for your entity.
- Link to the FAQ’s regarding the Act from FinCEN
- Alternatively, if you would like Creative Planning Tax to prepare and file for you, just respond to this e-mail and we can take care of it for you.
What deadlines & amounts do I need to know?
- Entities that were established prior to 2024:
- For entities formed prior to 1/1/2024, you have until 1/1/25 to file BOI. But don’t wait, this is an easy thing to forget to do and the penalties for late filing are high.
- Entities that were/are established on or after 1/1/2024:
- For entities formed between 1/1/24 to 12/31/2024, you have only 90 days from establishment to file your BOI
- For entities formed on or after 1/1/25 and after, you have 30 days from establishment to file your BOI
IMPORTANT*** Every small business owner, corporation, LLC owner, needs to file on time (if required) as non-compliance can result in severe penalties ($591/day and up to $10,000 maximum if late).
Please review the links I have provided and the FAQ link for common questions about this new act and your next steps. As always, reach out with questions and if you are interested in having us prepare your filing for you.