- With the new year, the federal government has enacted new reporting requirements for most entities.
- A Beneficial Ownership Report has to be filed that lists all owners over 25%.
- For commercial real estate professionals – with lots of single purpose entities – this could potentially be a large undertaking.
New calendar years often bring new regulation. That’s the joy of our system of government and, as business owners and executives, I reckon we are all familiar with that.
Well welcome to 2024 and a new landscape reshaped by the Corporate Transparency Act (CTA). As the calendar flips, a new compliance burden has shifted into focus. And it is one that could require a significant time and expense commitment for you. So lets talk about the reporting requirements of the Corporate Transparency Act.
What’s at stake?
In theory, Congress enacted the CTA aims to shine a light on the often-murky corners of corporate ownership. By requiring disclosure of “beneficial owners” – those with 25% or more ownership or control – the government hopes to combat financial crime, money laundering, and terrorist financing. So, who needs to comply? A lot of entities.
- Domestic reporting companies: This broad category encompasses corporations, LLCs, and other registered entities formed or registered in the U.S. (excluding certain public companies and exempt entities).
- Foreign reporting companies: Companies formed outside the U.S. but registered to do business here also fall under the CTA’s gaze.
What needs to be filed?
So now that we know who needs to report, what do they need to report?
- Beneficial Ownership Information (BOI) Report: This document requires the entity to disclose the identities of its beneficial owners, including:
- Name, date of birth, and address
- Social Security number or another unique identifier (passport, driver’s license, etc.)
- Percentage of ownership or control
- Company Applicants: In addition to reporting the beneficial owners, entities must also disclose who the company applicants are. You’ll need to disclose:
- Name, date of birth, and address of each entity applicant who is causing the BOI to be filed.
- The date the application was filed.
- Amendments: Life changes, and so do business structures. Any alterations to the BOI or Company Applicants information necessitate an amendment filing within 30 days. Think name changes, ownership shifts, or new applicants joining the fold.
When does the clock start ticking?
For existing entities (formed before January 1, 2024), the filing window opens on January 1, 2024, and closes on January 1, 2025. New entities formed after January 1, 2024, have tighter deadlines: file within 90 days of receiving notice of formation (until December 31, 2024), and within 30 days thereafter.
Where do these filings land?
All reports find their home in the Financial Crimes Enforcement Network’s (FinCEN) secure, non-public database. Access is reserved for authorized government agencies for national security, intelligence, and law enforcement purposes.
Exemptions for Some Entities?
Not everyone gets swept up in the CTA’s current. Some entities, like publicly traded companies or those already subject to extensive financial reporting, receive an exemption pass. But remember, exemptions can change, so keep your radar tuned for updates.
So that’s the issue. The federal government has new reporting requirements for all entities. And for those of us in the commercial real estate industry – with lots of single purpose entities – this is going to be a bit of a pain. But such is life.
If we can be of help you with any of your filing requirements, please do not hesitate to reach out. Thanks.
