New Federal Reporting Requirement – Beneficial Ownership Information

While dealing with state regulations is crucial, it’s also essential to stay informed about federal requirements that may impact your business. One such requirement gaining prominence is the report of beneficial ownership information.

What is Beneficial Ownership?

Beneficial ownership refers to the individuals who ultimately own or control a business entity. In the past, many businesses could maintain a certain level of anonymity when it came to identifying their true owners or controllers. However, in response to concerns about money laundering, tax evasion, and other illicit activities, the U.S. government has introduced new regulations to increase transparency.

The Corporate Transparency Act (CTA)

In January 2021, the United States Congress passed the Corporate Transparency Act (CTA) as part of the National Defense Authorization Act for Fiscal Year 2021. The CTA aims to combat illicit financial activities by requiring businesses to disclose their beneficial ownership information to the federal government.

Who Needs to Comply with the CTA?

The CTA applies to a broad range of business entities, including corporations, LLCs, partnerships, and more. It’s important to note that the CTA may affect both existing and newly formed entities.

What Information is Required under the CTA?

Under the CTA, businesses must report the following information to the Financial Crimes Enforcement Network (FinCEN):

  1. The full legal name of each beneficial owner.
  2. Each beneficial owner’s date of birth.
  3. Each beneficial owner’s current residential or business address.
  4. A unique identifying number (such as a driver’s license or passport number) for each beneficial owner.

Filing Deadline for the CTA

The filing deadline for the CTA is January 1st, 2025. Businesses should be prepared for this federal reporting requirement, and it’s advisable to consult with legal and financial professionals to ensure compliance once the deadlines are established. The Florida Department of State has published a clear, easy-to-read information page with links to various Federal sites with further information.

Penalties for Non-Compliance

Non-compliance with the CTA can result in significant penalties, including fines and potential imprisonment. Therefore, it’s crucial to stay informed about the latest developments and requirements under this federal law.

Keep a close eye on developments related to the Corporate Transparency Act at the federal level to avoid any potential compliance issues down the road. Remember, when it comes to legal and regulatory matters, seeking guidance from professionals is always a smart move to protect your business and your peace of mind.