Corporate Tax Transparency
Starting on January 1, 2024, new rules go into effect under the Corporate Transparency Act to prevent anonymous business entity ownership by requiring companies to report their “beneficial owners” to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The new regulation does apply to entrepreneurs, small business owners, and larger companies to prevent money launderers, fraud, and others from hiding their identities in “shell companies”. This will affect up to 30 million small businesses, including Single Member LLCs filing a Schedule C.
Major Points about this new act:
- A beneficial owner is anyone who has substantial control of the company and/or owns or controls at least 25% of the company.
- Exemptions for the new reporting requirement:
- Filing is not required if the entity has more than 20 full-time employees, has a physical office in the US, and has filed a tax return with more than $5 million in gross receipts.
- FinCen will start accepting applications on January 1, 2024.
- Any entity (business) formed January 1, 2024 or later will have 30 days to file the report.
- Any entity (business) formed prior to January 1, 2024 must file by January 1, 2025.
- The report to be filed is called the “Beneficial Ownership Information” (BOI) and this filing will need to be included in the list of things to do when starting and maintaining a business.
- Failure to file will result in a penalty up to $500 per day, maximum $10,000 and/or up to two years in jail.
- You may request a unique FinCen Identifier on or after January 1, 2024 prior to filing, when filing, or after filing.
- If you request a FinCen Identifier after filing, you will need to submit an updated BOI report requesting the FinCen Identifier.
- If you would like Guiden Tax to prepare your BOI to FinCEN, you will need a unique FinCEN identifier.
- FinCEN Reporting Website: https://www.fincen.gov/boi
- FinCEN Reporting Instructions: Beneficial Ownership Information Instructions
