If you own or control a business entity, there's a new federal filing requirement that went into effect on January 1, 2024. Moreover, there are substantial penalties for not meeting the new filing requirements.
The CTA necessitates filing two reports simultaneously with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).:
1) Beneficial Owner Information Report (BOI report)
2) Company Applicant Information Report
EXISTING BUSINESS ENTITIES: If your entity (Partnership, Corporation or LLC) was in existence before 12/31/23, you will have until 12/31/24 to file your report in most instances.
NEW BUSINESSES: If you are creating a new entity after 01/01/24. you will have 90 days to file your report.
Claremont Management is knowledgeable about all CTA filing requirements. Here are the basics:
Who Must Report?
If you own or control 25% or more of a Corporation (C-Corp or S-Corp), an LLC including a single-member LLC or an LLC formed for a rental property, a Limited Partnership (in most states), or a Limited Liability Partnership, or Family Trust, you are required to file.
When Are Reports Due?
New businesses formed on or after January 1, 2024 must report within 90 days of business formation. Existing reporting companies will have until December 31, 2024. However, reports should be filed at least three months prior to assure there is time to submit a corrective report (in the event one should be required).
Penalties for Non-Compliance:
Keep in mind, these new reporting requirements carry severe penalties for non-compliance. Civil penalties can reach up to $500 for each day of violation (up to $10,000 maximum). Moreover, there are potential criminal penalties, including imprisonment for up to two years for willful provision of false or fraudulent beneficial ownership information or failure to report complete or updated information to FinCEN. Again, a corrective report submitted within 90 days can mitigate civil or criminal liability. That's why Claremont Management will begin filing reports for clients at the end of the tax season and throughout the summer months.
What Businesses Are Exempt?
Most businesses in the United States will be required to file, however there are some exemptions, including: Sole Proprietorships, General Partnerships (except in Delaware), most Business Trusts, and large operating companies with 20 or more employees, or companies in heavily regulated industries (such as Banking, Insurance, Healthcare, etc.).
The Bottom Line...
Navigating the complexities of CTA compliance demands careful attention. With over 30 years of experience, Claremont Management is your expert in tax and related government matters. To ensure you meet the deadline and comply with the new reporting requirements, John or Maria will be happy to explain your specific business requirements when you discuss your 2023 tax returns this year and set up a follow-up consultation when they are ready to start this process on your behalf. Until then, please reach out to John or Maria with any questions you may have at (847) 398-1275.