New Federal Reporting Requirements for LLCs, Corporations and Business Entities. Congress has passed the Corporate Transparency Act (“CTA”), which went into effect on January 1, 2024. The purpose of the CTA is to prevent bad actors to hide funds through complex ownership structures. The disclosure requirement applies to most LLCs, closely held corporations and similar entities.
The CTA requires existing companies to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”). Beneficial owners are individuals who, directly or indirectly, own or control a significant portion of a reporting company.
The deadlines for reporting are as follows:
- a) For any company created or registered prior to January 1, 2024, you will have until January 1, 2025, to report your beneficial ownership information. Thus, you will have until the end of this year to report your beneficial ownership information for the Companies.
- b) For any company created or registered in the year 2024, the beneficial ownership information must be reported within 90 calendar days after the Arizona Corporation Commission (“ACC”) accepts the Articles of organization as “filed.”
- c) For any company created or registered on or after January 1, 2025, you must report information within 30 calendar days after the ACC accepts the Articles of organization as “filed.”
The information required to be reported includes full legal names, residential addresses, dates of birth, and identification numbers. This disclosed information is not made public, but can be used by law enforcement and certain government agencies for investigative purposes.
The Department of the Treasury stated that reports will begin being accepted on January 1, 2024. The filing system can be accessed by visiting https://boiefiling.fincen.gov/fileboir.
The reporting process is expected to be simple enough that business entities can complete the process without the assistance of an attorney or accountant. FinCEN will not charge a fee for submitting the beneficial ownership information report.
The CTA sets out that failure to report beneficial ownership information may subject violators to penalties of up to $500 for each day that the violation continues. Violators may also be subject to criminal penalties. Thus, be sure to timely file your beneficial ownership information for your existing companies and any companies you later create.
By M. Scott Rowan, Esq, handling matters of estate planning and proper titling of assets to avoid probate, including ownership in business entities.