Do you or your clients manage or have an ownership interest in a corporation, limited liability company or other business entity or plan to form one?  If so, you’ll need to comply with new federal reporting requirements. 

To attempt to crack down on shell corporations that engage in money laundering, real estate fraud, and other illegal activities, the federal Corporate Transparency Act now requires corporations, limited liability companies, limited liability partnerships and other entities that are created by filing with a Secretary of State’s Office to file a report with the Financial Crimes Enforcement Network (FinCEN).  This includes foreign entities that were created in another company and registered with a Secretary of State’s Office in the United States. 

When to Report:

• Entities that were formed before January 1, 2024 must report beneficial owners by January 1, 2025 but are not required to report company applicant who filed the paperwork to create the entity.
• LLCs and corporations that are formed on or after January 1, 2024 must report beneficial owners and details about the company applicant within 90 days after forming anytime in 2024 or within 30 days after forming in 2025 or later.
• Entities that merge or change ownership must report within 30 days.

How to Report:

File the report electronically.  BOI E-FILING (fincen.gov)

What to Report:

Beneficial owners:  LLCs, corporations, and other “reporting companies” must report the name, date of birth, address, and other personal information for all “beneficial owners.”   A beneficial owner is defined as a person who:

• “owns or controls at least 25% of the ownership interests of a reporting company” or;
• “exercises substantial control” over a reporting company.

According to FIN CEN,  “substantial control” means that an individual: 

• is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function);
• has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company;
• is an important decision-maker for the reporting company;
• exercises any other form of substantial control over the reporting company

Company applicants – LLCs, corporations and other reporting companies that are created on or after January 1, 2024 must also report the name of the person who filed or was responsible for filing documents to create a new company.

Limited exemptions apply.

 Resources:

• www.fincen.gov/boi:
• Frequently Asked Questions about the reporting requirement.
• An introductory video and more detailed informational video about the reporting requirement.

Questions:  For help with filing, contact an accountant, corporate attorney or FIN CEN. https://www.fincen.gov/contact.

For more resources, contact the RIAR Legal Department at 401-432-6945 or email [email protected].