Dear Client:
We want to alert you to a new law that may impact our clients who are owners of various types of business entities. In 2021, the Corporate Transparency Act (“CTA”) was enacted. The CTA created new requirements for certain entities to report to the Financial Crimes Enforcement Network (“FinCEN”) starting on January 1, 2024. As an example, even a limited liability company (“LLC”) formed for real estate investment or estate planning purposes will be subject to the new rules.
This letter is intended to alert you to this new law but is general and does not capture every nuance of the CTA, nor is it meant to provide legal advice. The application of the CTA to your particular situation may require legal analysis, and so we strongly encourage you to contact your attorney to ensure proper compliance.
Are you required to file a report with FinCEN?
Generally, those who must report under the new law include but are not limited to, entities like corporations, limited partnerships, and LLCs. You will be required to file a report with FinCEN if your entity is considered a “Reporting Company” (as defined in the CTA) and a statutory exception does not apply.
What information must you report to FinCEN?
Unless an exception applies, the CTA generally requires a Reporting Company to file a report with FinCEN that discloses certain information, identifies the Reporting Company’s “Beneficial Owners,” and for those entities created on or after January 1, 2024, identifies the “Company Applicant.”
When must you file a report with FinCEN?
The deadline to file a report depends on when the Reporting Company was created (generally, 1/1/25 if created prior to 2024, 90 days after creation if created during 2024, and 30 days after creation if created on or after 1/1/25). Changes to previously reported information must also be corrected within certain deadlines.
How do you file a report with FinCEN?
Reporting Companies have several options for filing the report with FinCEN. Engaging legal counsel to assist with the analysis and filing is recommended, but a Reporting Company may choose to use FinCEN’s e-filing portal on its own. Another option is to engage a third-party service provider for filing.
What happens if you fail to file a report with FinCEN?
There are civil and criminal penalties for failure to file a report with FinCEN.
Where can I find additional information about the CTA?
There are many resources available to you, including your attorney and FinCEN’s website (https://www.fincen.gov/boi).
If you are an owner of an entity, we strongly encourage you to contact your attorney to assist with the compliance obligations under the CTA. If you need help finding legal counsel, please contact your portfolio manager.