October 12, 2023
The Corporate Transparency Act takes effect on January 1, 2024. The Act requires “Reporting Companies” to file a report containing beneficial ownership information with FinCEN, a division of the U.S. Department of Treasury.
A Reporting Company is any entity that meets the definition and includes both domestic reporting companies and foreign reporting companies. FinCEN has issued a Guide to help small businesses work through this process.
If you are a business that has organized as a corporation, LLC, or other entity that filed a document with the secretary of state or any similar office under the law of a State of Indiana Tribe, then you are most likely a reporting company, unless you fall within an exemption. Most non-public small businesses formed as an entity will be required to file this report. There are 23 listed exemptions, such as Banks, Credit Unions, Securities Reporting Issuers, Insurance Companies, and Public Utilities, to name a few. The form requires you to list beneficial owners of your Company.
A beneficial owner is an individual who exercises substantial control over a reporting company, such as the President of the Company OR owns or controls 25% or more of the ownership interests of a reporting Company. Businesses may also have to report Company Applicants.
Company Applicants include the individual who filed the document creating the entity with the secretary of state or other office and the individual who directs or controls that filing.
Under the current proposed rule, entities formed before January 1, 2024, have one year to file the report, and entities formed after January 1, 2024, have 90 days to file the report with FinCEN. Any changes in ownership or reporting information may also have to be reported.
If you willfully fail to report or provide false information, you may be liable for a Civil Penalty of $500 per day or criminal fines of up to $10,000 and possible jail time. Senior officers of reporting companies can be held personally liable.
If you need more information or need our assistance in complying with the reporting requirements, please contact Cynthia S. Gillard, or anyone at the firm of Warrick & Boyn, LLP.