The Beneficial Ownership Information Reporting Rule, a component of the Corporate Transparency Act, introduces a new reporting requirement overseen by the Financial Crimes Enforcement Network (FinCEN), a division within the U.S. Department of the Treasury. Its primary purpose is to enhance transparency in the ownership structures of companies, serving as a vital tool for federal authorities to combat financial crimes and fraudulent activities, such as money laundering, corruption, human trafficking, drug trafficking, tax fraud, and fraud against various stakeholders.
Under the Corporate Transparency Act, businesses, including multi-member and single-member LLCs, must file a Beneficial Ownership Information Report to avoid potential criminal and civil penalties. Failure to comply can lead to significant consequences, including criminal penalties with imprisonment of up to two years and fines of up to $10,000.
Every non-exempt business is responsible for submitting a Beneficial Ownership Information Report, including complete and detailed information about individuals who exercise control or ownership within the company. Those who intentionally disregard reporting obligations, file inaccurately, or mislead FinCEN may face personal accountability.
The reporting rule took effect on January 1, 2024. The filing deadline depends on the business's formation date, with businesses formed before January 1, 2024, having until December 31, 2024, to file. Formed companies on or after January 1, 2024, have 90 days after formation, and those amending their formation documents on or after January 1, 2024, have 30 days to submit a new report.
The report mandates detailed information about the reporting business, including its full legal name, trade or DBA names, physical address, federal tax I.D. number (EIN), and jurisdiction of the establishment. Additionally, it requires comprehensive data about the owners, encompassing their full legal names, birthdates, current addresses, and images of acceptable identification documents like passports or driver's licenses. This should also include the issuing jurisdiction and document I.D. number. If the applicant (an individual who filed formation documents) is not a beneficial owner, their information is also necessary.
The Corporate Transparency Act (CTA) also includes exemptions for twenty-three (23) types of entities. Businesses should carefully review these exemptions. Some common exemptions encompass qualified charities and business entities meeting specific criteria, such as having a physical office in the U.S., a workforce of at least twenty (20) full-time employees, or gross receipts exceeding $5 million in the previous year. The exemptions also apply to publicly traded or federally regulated entities are exempted.
Beneficial ownership information, as stipulated by the Corporate Transparency Act (CTA), encompasses specific details about individuals who either directly or indirectly exert substantial control over a reporting entity or directly or indirectly own or control twenty-five percent (25%) or more of the ownership or voting rights within a reporting entity. Trusts meeting these criteria may also involve trustees or beneficiaries as beneficial owners. Determining substantial control requires a thorough analysis of the CTA provisions.
Engaging the expertise of an experienced business attorney is vital for business owners when preparing beneficial ownership reports. While do-it-yourself websites may seem convenient, the intricacies of compliance with the Corporate Transparency Act require understanding the legal and regulatory landscape. An experienced attorney possesses the knowledge and insight to navigate these complexities effectively, ensuring accurate reporting, minimizing the risk of costly errors, and offering legal guidance on interpreting the Corporate Transparency Act's provisions and avoiding potential fines and penalties.
The flat-fee includes a 15-minute attorney consultation and the submission of the business ownership report to FinCEN.
Quick 15-Minute Q&A Period: Our attorney consultations include a quick attorney consultation to understand our client's needs, including asking and answering questions.
Review of Client's Situation: Part of our consultation fee is analyzing and assessing each client's situation.
Customized Ownership Report Preparation: When clients book an attorney consultation, one of our experienced business attorneys will prepare and file a beneficial ownership report with FinCEN.
Guarantee: In case of any errors on our part, such as incorrect names or ownership information in the beneficial ownership reports, we will promptly correct errors, prepare, and file at no additional cost to you.
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