| THE CTA IS HERE – BUT WILL IT STAY? READ ON…
ALERT
By now many of you may have heard from your tax preparers or financial advisors about a new federal law called the “CTA” or “Corporate Transparency Act.” This act, which became effective on January 1, 2024, affects you directly if you are a “beneficial owner” of a company or corporate entity. As such, this new law affects all of our business clients. Yes, we have business clients. 😊 You may know us as the leaders in Elder Law and Estate Planning, but our Corporate Department, headed by my Partners, Larry Siegel and Lilia Baialardo, is as strong as ever and equal in quality of service.
I asked Lilia if she could help describe this new law and what your next steps need to be…so…LISTEN TO LILIA!
Hi all, and thank you, Lawrence!
The CTA was passed by our federal government through the Financial Crimes Enforcement Network (or “FinCEN”) to require businesses to report information concerning their companies’ “beneficial ownership information” (BOI). Why, you say? The answer is so that they can track down and stop money laundering, domestic terrorism, and other financial crimes from being able to occur through the guise of “companies.”
What will you have to report? Companies will now be required to report information for “beneficial owners” which are individuals or entities that exercise substantial control over OR own 25% of a covered business. Additionally, companies must name a “Reporting Person” to report the required information and to be responsible for updating information that changes in the future within a specified time period. Information to be reported includes company names, trade names and DBAs; physical addresses; formation location; Taxpayer Identification Numbers (TIN) and/or Employer Identification Numbers (EIN). Additionally, information for “beneficial owners”, “Reporting Persons”, and “company applicants” (sometimes attorneys and CPAs) must be disclosed, including full legal names, dates of birth, physical addresses, and copies of an active government-issued identification. In other words, they want a lot of information!
So, when do you have to file? Companies that were in existence prior to 2024, will have until the end of the year to file their report. Companies that were created on or after January 1, 2024, will have 90 days after their business’s formation date to file their initial BOI Report (IF you created a new company on January 1, 2024, your 90 days are about to expire!). After January 1, 2025, newly created businesses will have 30 days to file their report.
So what happens if you ignore this filing?
Bad idea. Failing to report could lead to civil penalties of $500 per day up to a maximum of $10,000 and criminal penalties of up to 2 years in prison.
Who is going to file this report for you? The answer is you! We are not undertaking this responsibility but we wanted to make you aware of it and the seriousness of noncompliance.
Here are the links to FinCEN’s website:
https://www.fincen.gov/boi, where you will find helpful information about this BOIR requirement: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf ,
as well as the form to complete: https://boiefiling.fincen.gov/fileboir
P.S. One federal court has found this new law unconstitutional, and it’s going up to the Supreme Court now; if you have a company formed prior to 2024, you may just want to wait and see what happens for now…we all hope it will just go away. Nevertheless, you still must file your report within the time limits above.
Thank you Lilia!
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