Our family runs a small service and subcontractor business. We fall under sub-S category for tax filing purposes.
IKYDK ...
I had heard about this new filing requirement a couple of months back, and asked my accountant about it and he was a bit skeptical that this requirement would stand, because there were numerous lawsuits being filed against it. The business another family member works for asked their accountant and he said, don't believe they won't do it, because they WILL, so you need to go ahead and take care of it.
So here is an excerpt from the letter received from my accountant this week:
"Dear Clients and Friends,
BOI
https://boiefiling.fincen.gov/FILING
As you may have heard, the US Government has enacted a new law for 2024 called the Corporate Transparency Act. It is to increase their knowledge of the owners and leadership of small businesses.
What does this mean for you?
If you are a filed business (LLC or Corporation), you are required to register with FinCen.gov (Financial Crimes Enforcement Network). The website provides a simple online registration form.
The registration form asks for: (1) the company’s name and the state where it was filed (2) the address, DOB, and Drivers License (or passport) info for all 25%+ owners and executives. It also asks the same info for the “Applicant”, which is whoever fills out the form.
Are there exemptions?
Yes, but they likely don’t apply to you.
You do not have to register if you are (generally): a governmental entity, a bank / credit union, securities broker/dealer, a securities exchange, registered with the SEC or Commodities Exchange, investment company, insurance company, insurance producer, CPA firm, public utility, financial market utility, tax-exempt entity, “entities assisting tax exempt entities” (Seek confirmation if you think this applies to you), large operating companies*, subsidiaries of some exempt companies, or an inactive business*.
A “large operating company” is one that (a) has more than 20 employees at all times (b) has more than $5M in sales based on the last tax return. If you fall below these thresholds at any time, you must report by the deadline.
An “inactive business” is one that (a) has existed for more than a year (b) is not engaged in active business (c) has not had a change in ownership in the last year (d) has not transacted more than $1000 in funds in the last year, and (e) has no assets or subsidiaries.
What is the deadline?
For companies (LLCs or corporations) filed after Jan 1, 2024, the company has 90 days to register. If you are formed on 1/1/25 or later, you have 30 days.
For companies (LLCs or corporations) filed before Jan 1, 2024, you must file the report before Jan 1, 2025.
Any updates or changes to the filed information must be filed within 30 days of the change (e.g. change in ownership, change in executive officers, someone changes their address) or discovery of the error that needs changing.
Is this a service that I will provide?
As tax professionals my first concern is to ensure that your tax returns are filed by the time they are due, and to resolve any disputes with the IRS that we have been contracted to resolve.
This filing is not an IRS filing but instead a Treasury Department requirement.
This preparation has been deemed to be legal services and we have been advised that we should not prepare these filings.
The registration is free. I have registered one company so far, and it is not difficult. Just filling out information in a form, and you must drag & drop a copy of each person’s drivers license.
To complete the form, you go to www.fincen.gov > Beneficial Ownership Information > File a report using the BOI E-filing System. There is also a PDF version, but we found the e-filing system to be easy enough. There is also a chat feature to ask questions.
Of note, you do not need a FinCen ID unless you own lots of companies and will be doing multiple registrations. It is just a fast-track, so you don’t have to enter your DOB, address, and license every time.
What if I don’t file it?
The willful submission of false/fraudulent information and/or the willful failure to report or update information can be subject to fines up to $10K and/or up to 2 years imprisonment. So, it is our recommendation that you proceed with registration as soon as possible (so you don’t forget) and implement some sort of system or reminder to file an update if any of the information requested by the form should change.
We are bringing this new law to your attention because it effects just about everyone who owns a small business, and it carries with it hefty penalties if companies do not bring themselves into compliance."
Forgive me if I don't respond quickly or not at all - Thanksgiving - cooking and hosting, etc. I never know when someone is going to need something - babysitting, crisis management (HA) etc. Or filing out a govt. form online :-/
“Corporate Transparency Act”
TG, thanks for posting this.
I was waiting until after the election to see if this might go away...hope it does.
You have to submit this bullshit is you are on an HOA board!!!
You have to submit this bullshit is you are on an HOA board!!!
I specifically turned down a lucrative opportunity this year as I would have had to file for this after forming an LLC.
It wasn’t only this issue - I also would have had to pick up some liability insurance (would have made the whole venture untenable anyway) - but this was a definite added pause for me and helped tip the scales.
Congress passed this?
What was the vote?
Chron Deterrence will make quick work of this.
Any law, rule or regulation that includes penalties for non-compliance must be promulgated by Congress.