In the aftermath of the released Panama Papers, US lawmakers enacted the Corporate Transparency Act. The law’s stated purpose is to combat money laundering through shell companies in the United States. Thus, US authorities want to know the Beneficial Ownership Information (BOI) of legal entities created in the United States.
When does this new law start? These new reporting requirements take effect January 1, 2024.
Who must file? All C-corporations, S-corporations, partnerships, and LLCs (single-member and multi-member) must file unless they meet one of the 23 exemptions. Most of the exemptions are for larger businesses. Nearly all small business owners will need to file.
What information must I provide? For each beneficial owner, the following information will be required:
· Full legal name
· Date of Birth
· Residential Address
· Image of one of the following: Passport, state-issued driver’s license, or state-issued identification.
Who is considered a beneficial owner? A beneficial owner is an individual who, directly or indirectly, exercises “substantial control” over the company or owns 25% or more of the company’s ownership interest.
What are the filing deadlines? New entities organized after December 31, 2023, must file within 30 days of creation. Existing entities organized before January 1, 2024, must file by January 1, 2025. Any changes to the initial filings must be reported within 30 days. There are no annual filings required. FinCen recently announced that legal entities created during 2024 will have 90 days to file after creation rather than the standard 30 days.
What are the penalties for not filing? BOI rules provide for both civil and criminal penalties. Civil penalties can be up to $500/day, criminal penalties of up to $10,000, and/or imprisonment for up to two years.
Who will have access to this information? You must report the above information to FinCEN (Financial Crimes Enforcement Network). The law allows FinCEN to disclose this information to federal, state, and local law enforcement agencies, judges, and prosecutors.
FinCEN is developing its reporting system, Beneficial Ownership Secure System (the BOSS), to receive, store, and maintain BOI. This system will not begin to accept reports until January 1, 2024. So, there is nothing for you to report currently.
Here’s a link to the FinCEN website to see their FAQs. https://www.fincen.gov/boi-faqs
If you would like to discuss your business or personal tax planning, tax preparation, and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton, PA office to discuss your situation. You can also schedule a consultation at Click Here.
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About Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS-licensed Enrolled Agent and a Certified Tax Resolution Specialist who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA. This includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, and West Chester. We also serve clients in Delaware, New Jersey, New York, and the United States.
Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.
