Beginning January 1, 2024, the Corporate Transparency Act requires all U.S.-based entities to report to the Financial Crimes Enforcement Network (FinCEN) detailed information about the entity and its key stakeholders – called “beneficial owners.”
Any business with any legal entity (including single-member LLCs with minimal activity) will be impacted. Small businesses are included.
Pinion advises businesses to understand what these reporting guidelines will require from them, and when, to avoid penalties associated with failing to file the required reports under their deadlines.
Do you fall under this requirement? Here’s what you need to know:
- This is not a tax reporting requirement. This reporting requirement applies to business entities regardless of their tax structure or position, so if you have any kind of business entity, regardless of its tax position, you need to be aware of this reporting. Businesses can complete these reports themselves.
- Deadlines are approaching.
- For entities in existence before January 1, 2024, initial reports must be filed by December 31, 2024.
- For new entities that are created on or after January 1, 2024, initial reports must be filed within 30 days of formation. FinCEN is proposing to allow entities formed in 2024 90 days to file their initial report, but beginning in 2025, the 30-day initial report deadline would resume.
- Failing to file reports carries large penalties. Failing to timely file reports carries a penalty of up to $500 per day, up to $10,000 per entity.
- Small businesses are least likely to be covered by an exception. Exceptions to the reporting requirements are very limited. The Corporate Transparency Act is seeking to gain information about small entities that could have as-yet-unknown foreign investment or be engaging in money laundering activities.
Extending these deadlines requires an act of Congress: How to request a delay
The reporting deadlines are set in statute, not by FinCEN, so any extension of the filing deadline requires Congress to pass legislation.
- Action to delay the rule: You can contact your representatives through the submission of a simple form created by Pinion’s Government and Public Affairs team.
Pinion advisors will continue to keep you informed on any activity or changes surrounding these reporting requirements. If you have questions, please contact a Pinion advisor.