If you own, or have control over, a business entity — Partnership, Limited Liability Company (LLC), Corporation, etc. — that entity most likely has a reporting requirement under the Corporate Transparency Act, enacted in 2021 to help prevent money laundering and tax fraud.
For all entities that existed as of January 1, 2024, the reporting deadline is December 31, 2024. Note that entities formed during 2024 must file the report sooner – within 90 days of formation. Beginning in 2025, new organizations will have only 30 days from formation to file the report.
The required report to be filed is the Beneficial Ownership Information (BOI) Report. In that, the entity is required to report all Beneficial Owners, who are individuals and who: (1) own at least 25% of the entity (direct or indirect ownership); OR (2) can exercise significant control over the entity.
The report includes personal information about the individual Beneficial Owners, including birthdays and residential addresses. If there are any changes to this information after filing, the BOI Report must be updated within 30 days.
There are significant penalties for non-compliance or for providing incomplete information.
The identification of beneficial owners is a legal determination based upon the entity’s operating agreement and equity ownership. These determinations should be made by the entity’s legal counsel, and legal counsel are the most qualified to prepare and file the BOI Reports.
We are encouraging all LNW clients with ownership interests in business entities to proactively reach out to a trusted legal advisor as soon as possible to start their CTA compliance efforts. At the same time, we are advising LNW clients to be hypervigilant about CTA-related fraud. The U.S. Financial Crimes Enforcement Network — FinCEN — has learned of several fraudulent attempts to solicit personal information from business owners under the guise of CTA compliance. FinCEN’s list of red flags is available in the Alert found at fincen.gov/boi.
Individuals can avoid providing personal information directly to businesses for use in BOI Reports by securing a FinCEN ID number, available at https://fincenid.fincen.gov, and providing that number to the business instead.
