Don’t Get Zapped $591 Per Day!!
Avoid $591 per day Penalty – Corporate Transparency Act
Are you an owner of a limited liability company (LLC) or a corporation or a limited liability partnership? If not, you can skip this article. However, if you do have an ownership interest, you should keep reading. You must take action to avoid severe penalties unless you have already done so.
The Corporate Transparency Act (CTA), which went into effect on January 1, 2024, imposes a brand-new federal filing requirement on most corporations, limited liability companies, and limited partnerships and on certain other business entities.
No later than December 31, 2024, all non-exempt business entities that existed on December 31, 2023, must file a beneficial owner information report (BOI report) with the Financial Crimes Enforcement Network (FinCEN)—the Treasury Department’s financial intelligence unit.
These BOI reports must disclose the identities and provide contact information for all the entity’s “beneficial owners,” that is, the humans who either (1) control 25 percent of the ownership interests in the entity or (2) exercise substantial control over the entity.
The CTA does not apply to sole proprietors or general partnerships in most states. But it does apply to single-member LLCs, even though the tax code disregards such entities and taxes them on Schedule C, E, or F of Form 1040.
Some businesses are exempt from the CTA, including
- larger businesses with 20 or more employees and $5 million in receipts, and
- businesses already heavily regulated by the government, such as publicly traded corporations, banks, insurance companies, non-profits, and others.
FinCEN has created a new database called BOSS (Beneficial Ownership Secure System) for the BOI data and is deploying the BOSS to help law enforcement agencies prevent the use of anonymous shell companies for money laundering, tax evasion, terrorism, and other illegal purposes. It will not make the BOI reports publicly available.
The initial BOI report filing does not expire, and you don’t need to renew it. But you have an ongoing duty to keep the BOI report up to date by reporting any changes to FinCEN within 30 days of occurrence.
Willful failure to report complete or updated information (or providing false information) may yield civil penalties of up to $591 per day with no cap and/or a $10,000 fine and/or up to two years in prison. There is no “reasonable cause” standard available to get a good faith reporting violator off the hook.
If you have questions or need assistance in avoiding this severe penalty, contact the Sodowsky Law Firm at 703-968-8000.
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Elden Sodowsky
Sodowsky Law Firm, PC
12500 Fair Lakes Cir Ste 100
Fairfax, VA 22033
