Many companies, including single member LLCs, are now required to report information about the individuals who ultimately own or control the company, i.e. beneficial owners, to the Financial Crimes Enforcement Network (FinCEN) on an annual basis. This new requirement is part of FinCEN’s continued efforts to fight against money laundering, terrorism financing, and other financial related crimes which harms security interests of the United States and its allies. Newly formed entities (on or after January 1, 2024) will have 90 days from the date of formation to prepare necessary disclosures, while existing companies will not be required to report until December 31, 2024.
Penalties for noncompliance can be severe including civil penalties of up to $500 per day and criminal penalty of up to $10,000 and/or imprisonment of up to two years. Currently there is some uncertainty as to how FinCEN will enforce the new requirements and we may see additional changes before the delayed reporting requirements are in effect. While HSC is here to help with your Corporate Transparency Act reporting needs these services will be outside the scope of our annual tax engagement and will need to be deferred until after the April 15th deadline. If you have formed a new entity in 2024, we encourage you to reach out to your attorney to address the filing requirements. Stay tuned as developments progress as the fate of this reporting remains uncertain. More information can be found by visiting FinCEN directly at https://www.fincen.gov/boi
