Did you know that under the Corporate Transparency Act (CTA) LLCs can face a $591 per day civil fine (which grows with inflation), and criminal penalties, including a $10,000 fine and/or up to two years of imprisonment, if you fail to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN)? This report details the identities of an LLC’s owners. That means if you hold your home through an LLC (not uncommon if you rent the home out or otherwise hold it as an investment), you have to take care of this soon!
FinCEN implemented the BOI reporting provisions to protect U.S. national security and the U.S. financial system since illicit actors frequently use corporate structures such as shell and front companies to obfuscate their identities and launder illegal gains.
Any entity created by filing a document with a Secretary of State, including corporations and limited liability companies (LLCs), are subject to the BOI form requirement, meaning they must file information about their beneficial owners with FinCEN. There are a number of exceptions, including a business having above $5,000,000 in sales, that generally would not apply to homeowners.
The rule only requires an entity, for example an LLC, to identify itself and report four pieces of information about each of its owners: name, birthdate, address, and a unique identifying number and issuing jurisdiction from an acceptable identification document. It is a quick process you can complete online or your attorney can handle it if your situation is more complicated. For residents of California, which is a community property state, don’t forget to include your spouse as an owner!
As mentioned, you need to take care of this soon! Reporting companies registered before January 1, 2024 will have until January 1, 2025 to file initial reports, while reporting companies created or registered after January 1, 2024, will have 30 days after receiving notice of their registration to file their initial reports.
If you have any questions, feel free to contact Jay ONeil, Esq., CEO of CTA Safe, Inc.. CTASafe partners with small businesses and their advisors to help them get and stay compliant and eliminate potential liability.
This is not legal advice. If you have any questions about the requirements of the Corporate Transparency Act, contact an attorney.
