The Corporate Transparency Act (CTA) was enacted January 1, 2021 and requires additional reporting on beneficial owners by many businesses. Most businesses have their first reporting requirements due by January 1, 2025.
Newly formed businesses (1/1/24 or later) have ninety days to file initial beneficial ownership reports.
Newly formed businesses (1/1/24 or later) have ninety days to file initial beneficial ownership reports.
We recently sent a letter to many of our clients with additional details on this program and how we can help. If you wish to view that full letter, click here.
Is your business subject to these new reporting requirements?
Entities required to comply include corporations, partnerships, limited liability companies (LLCs), and other companies that are created by a filing with a Secretary of State (“SOS”) or equivalent official. It also applies to non-US companies that register to do business in the US.
Common Exemptions:
Who is a “beneficial owner?”
A beneficial owner is any individual who, directly or indirectly, exercises “substantial control” or owns or controls at least 25% of the company’s ownership interests.
“Substantial control” includes any of the following:
Other individuals who may qualify include individuals who may exercise control directly or indirectly through board representation, ownership, rights associated with financing arrangements, or control over intermediary entities that separately or collectively exercise substantial control.
You may need to seek legal guidance to ultimately determine who are deemed beneficial owners within your organization.
What needs to be reported?
For each identified beneficial owner, they will need to report the following information?
What happens if you don’t file?
You should take these filing requirements seriously and make an effort to accurately report beneficial owners.
How can we help?
Mason + Rich is available to assist clients with filing these reports through FinCEN. If you’re interested, please contact us, and we will provide a separate engagement letter for this service. Once engaged, we will send you an information form to gather the necessary data for reporting.
Please note that our services are limited to assisting with report filings and providing limited guidance related to those reports. We are not authorized to offer legal advice, so in certain situations, you may need to consult your attorney for legal counsel.
Where can you learn more?
FinCEN and other organizations have circulated a wealth of information on this new reporting requirement, here are some detailed resources:
Is your business subject to these new reporting requirements?
Entities required to comply include corporations, partnerships, limited liability companies (LLCs), and other companies that are created by a filing with a Secretary of State (“SOS”) or equivalent official. It also applies to non-US companies that register to do business in the US.
Common Exemptions:
- Entities already regulated by federal or state governments and as such already disclose their beneficial ownership information to governmental authorities.
- Tax-exempt entities described in section 501(c) of the Internal Revenue Code
- Inactive entities formed on or before 1/1/2020, not engaged in an active business (additional requirements do apply but are not detailed here)
- “Large operating companies” (must meet all of the following)
- Employ at least 20-full time employees in the US
- Gross revenue (or sales) over $5 million on the prior year’s tax return
- Operating presence at a physical office in the US
Who is a “beneficial owner?”
A beneficial owner is any individual who, directly or indirectly, exercises “substantial control” or owns or controls at least 25% of the company’s ownership interests.
“Substantial control” includes any of the following:
- Serves as a senior officer of the company
- Has authority over the appointment or removal of any senior officer or a majority of the board
- Directs, determines, or has substantial influence over important decisions made by the company
Other individuals who may qualify include individuals who may exercise control directly or indirectly through board representation, ownership, rights associated with financing arrangements, or control over intermediary entities that separately or collectively exercise substantial control.
You may need to seek legal guidance to ultimately determine who are deemed beneficial owners within your organization.
What needs to be reported?
For each identified beneficial owner, they will need to report the following information?
- Name
- Birthdate
- Address
- Unique identifying number from an acceptable identification document and an image of that document
What happens if you don’t file?
- Civil penalties up to $591/day
- Criminal penalties include a $10,000 fine and/or up to two years of imprisonment
You should take these filing requirements seriously and make an effort to accurately report beneficial owners.
How can we help?
Mason + Rich is available to assist clients with filing these reports through FinCEN. If you’re interested, please contact us, and we will provide a separate engagement letter for this service. Once engaged, we will send you an information form to gather the necessary data for reporting.
Please note that our services are limited to assisting with report filings and providing limited guidance related to those reports. We are not authorized to offer legal advice, so in certain situations, you may need to consult your attorney for legal counsel.
Where can you learn more?
FinCEN and other organizations have circulated a wealth of information on this new reporting requirement, here are some detailed resources: