So, you may have heard recently that there's a new reporting requirement in 2024 for LLC owners and corporation owners. You may have also heard that a federal court recently ruled this new law unconstitutional, and that you no longer have to comply with its requirements.
We're here to tell you, no, you still have to comply with the beneficial ownership information reporting (referred to as "BOI Reports"), mandated under the 2024 Corporate Transparency Act.
A Quick Recap: What is the Corporate Transparency Act (CTA)?
The CTA is a significant piece of legislation enacted to combat money laundering, terrorism financing, and other illicit activities. It mandates that certain business entities (like LLCs and corporations - not sole props) disclose information about their beneficial owners to the Financial Crimes Enforcement Network (also known as "FinCEN"). The purpose is to increase transparency and accountability in corporate ownership.
When Should I, & How do I complete my BOI Report?
You can submit your BOI Report online here. If you formed your company before 2024, you'll have until December 31, 2024 to complete your BOI report.
If you filed your company anytime after January 1, 2024, then you'll have 90 days from the day of formation to complete your BOI Report.
You'll need to report the following information about your business entity:
The Reporting Company's Information
The "Reporting Company" is your business, and you'll need to input the LLC or Corporation's name as well as its Employer Identification Number (EIN), and address.
The Company Applicant's Information
**If you formed your LLC or corporation before January 1st, 2024, then you DO NOT need to provide information about the Company Applicant.**
The Company Applicant is whoever formed the LLC. This may have been you if you filed the formation documents yourself, or it may have been a third party like a lawyer, or even us at inflow!
You'll need the following information about the Company Applicant:
Full legal name
Date of birth
Current business street address
An acceptable form of identification (like a driver's license or passport) that is to be uploaded as a photo.
Any Beneficial Owner's Information
For every beneficial owner of an LLC, you'll need to provide the following:
Full legal name
Date of birth
Current residential or business street address
An acceptable form of identification (like a driver's license or passport) that is to be uploaded as a photo.
A beneficial owner is generally defined as an individual who, directly or indirectly, exercises substantial control over the entity or owns or controls at least 25% of the ownership interests.
Consequences of Non-Compliance
Failing to comply with the CTA’s BOI reporting requirements can lead to significant penalties, including:
Civil penalties: Up to $591 per day for each day the violation continues.
Criminal penalties: Fines up to $10,000 and/or imprisonment for up to two years for those who willfully or fraudulently violate the reporting requirements.
But Wasn't the CTA held Unconstitutional? Why Do We Still Need to Comply?
On March 1, 2024, in the case of National Small Business United v. Yellen, a federal district court in the Northern District of Alabama declared the CTA exceeds the Constitutions limits on Congress' power, and enjoined (this means "put a halt on"), the Department of the Treasury and the Financial Crimes Network from enforcing the CTA against the plaintiffs in that particular case. In an explicit notice from the Financial Crimes Network, they clarified this myth that business owners no longer have to submit BOI Reports in compliance with the CTA:
"Other than the particular individuals and entities subject to the court’s injunction, as specified below, reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN’s regulations."
There ya have it. Straight from the horse's mouth. This requirement is still in full effect for you and every other entity owner, who is not a plaintiff in National Small Business United v. Yellen. We'll keep you updated on whether the CTA is officially struck down. Until then, you'll need to comply. Sorry, we know this report is yet another piece of paperwork you didn't sign up for when starting your business. But, it is pretty straightforward to complete!
Rip The Bandage Off - Take Action Now!
Don’t wait until the deadline. Start gathering your beneficial ownership information now and reach out to us for any assistance you may need. Compliance is crucial, and we’re here to make it as smooth as possible for you. If you're too busy or just want to outsource this requirement to us, we can do this for you for $50 per beneficial owner! Let us know by emailing us directly at letsdothis@iminflow.com.
*Disclaimer: The above information is for general educational purposes only. Nothing in this blog article should be taken as legal advice. Reading this article does not form an attorney-client relationship with us. An attorney-client relationship is formed through a signed engagement agreement. If you would like further information, we would love to help you out! Feel free to reach out with any questions or schedule a free consultation with us through our booking calendar.
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