Legal Updates

NEW REPORTING REQUIREMENT FROM THE FINANCIAL CRIMES ENFORCEMENT NETWORK

Jul 16, 2024

THERE HAS BEEN A RECENT LAW CHANGE FOR OWNERS OF COMPANIES OR LLCS. FAILURE TO COMPLY COULD RESULT IN SIGNIFICANT FINES OR EVEN JAIL TIME!

WHAT IS THE LAW CHANGE?

The Corporate Transparency Act (“CTA”) is requiring a significant number of businesses to disclose beneficial ownership information (otherwise known as “BOI”) from people who own or control a company. The intent of the BOI reporting requirement is to help United States law enforcement agencies combat money laundering and other financial crimes. The CTA is governed by federal law and requires record keeping and filing of reports on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS but with the Financial Crimes Enforcement Network (FinCEN) under the Department of Treasury.

WHO IS REQUIRED TO COMPLY WITH THE CTA’S BOI
REPORTING REQUIREMENTS?

Beneficial Owners of Corporations, Limited Liability Companies (LLCs) or any similar entity created by the filing of a document with the Secretary of State (or any similar office) are required to comply. In many cases, this includes companies who ceased business operations before 2024 but who conducted business in 2023. However, there are 23 categories of exemptions, usually for large publicly traded companies.

WHO IS A BENEFICIAL OWNER?

An individual who either directly or indirectly:

  1. Exercises substantial control over a reporting company (meaning they apply significant influence over important decisions of the reporting company, including senior officers of the reporting company even if they have no ownership interest)
    or
  2. Owns or controls at least 25% of the ownership interest of a reporting company.

WHAT IS THE RISK OF NONCOMPLIANCE?

Penalties for failing to comply with the BOI reporting requirements can result in criminal and civil penalties of $500.00 per day up to $10,000.00, with up to two years in jail.

WHEN SHOULD YOU FILE?

WHAT INFORMATION IS REQUIRED TO BE REPORTED?

Companies must report the full name of the reporting company, any trade name or doing business as name (DBA), business address, state of formation, and IRS taxpayer identification number (TIN). Also, information on the Beneficial Owner(s) of the company, including name, birth date, address, and driver’s license/passport must be provided.

WE CAN HELP!

Piercey & Associates, Ltd. can likely assist in handling your company’s BOI reporting requirements or determine if your entity is exempt. If you would like us to assist you, please contact John at (224)848-4647 or via email at John@pierceyassociates.com so we can start the process of determining whether you need to file, and if so, provide you with a fee quote. If you don’t hear back from us within three weeks, please give us a call at (224)848-4646 as your email may have gone into a spam folder.

This communication may be considered Advertising Material. This communication does not establish an attorney-client relationship even if we have represented you in the past. The information contained in this communication is intended for general information purposes only and should not be applied to your specific facts and circumstances without consultation with competent legal counsel and/or another retained professional advisor. If you fail to contact us to retain our services, we will not take any further action on this issue and will presume you are handling the full responsibilities as detailed in this communication.