Due to recent legislation, specifically, the Corporate Transparency Act, most small businesses will be required to report certain ownership information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). We offer this service to our clients for a fee of $250. If you have additional entities, we offer a reduced fee of $125 for every additional entity reporting the same beneficial ownership information up to a total of 10 and after 10 entities, the fee is $100 for each additional entity.
Who must report?
Most entities that filed a document with their state’s secretary of state or a similar office to create their company will be required to report, including but not limited to trade-names, limited liability companies, corporations and limited partnership. While most entities will be required to report, see below for some very specific exceptions.
What happens if I choose not to report?
If you are required to report to FinCen and do not report, or report any false information, you could be liable for both civil and criminal penalties. The civil penalty is up to $500 for each day that the violation continues or has not been remedied. The criminal penalty is a fine up to $10,000 and/or imprisonment for up to 2 years.
What information will be required?
The entity will be required to report information on who their beneficial owners are. Included in the required information will be the entity’s legal name and any trade name or DBA, current address, jurisdiction, and Taxpayer Identification Number. The entity will also have to report the legal name, birthdate, home street address and an Identifying number of any beneficial owner, as well as a copy of the document which has the identifying number.
Attached to this letter is a form with the information El Resiliente LLC will need to prepare and file the report.
What is a beneficial Owner? A beneficial owner is an individual who directly or indirectly, through any contract, arrangement, understanding, and or relationship exercises substantial control over the entity or who owns or controls not less than 25 percent of the ownership interests of the entity. If you live in a community property state, i.e., Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, you are required to disclose your spouse, regardless of whether they own any part of the entity. In Alaska, Tennessee, Kentucky and Florida, if you formed a community property trust, you are required to disclose your spouse, regardless of whether they own any part of the entity.
When do I have to file the report?
We will begin filing these reports on January 1, 2024, on behalf of our clients. The reports are required to be filed by December 31, 2024, by any entity with a reporting requirement that was formed before January 1, 2024.
Any entity formed on January 1, 2024, or thereafter has 30 days to report the required information above, in addition, they will have to provide additional information with regards to company applicants.
How often do I need to file a report?
After filing an initial report, entities will only need to file a report if an updated or corrected report is required. An updated report is required if any changes are made to any of the information from the initial report or if any information not on the initial report is now required. Examples of circumstances that would require an updated report: address change, death of a beneficial owner, and sale of interest.
Who is exempt from the reporting requirement?
There are 23 different exemptions to the reporting requirement. The two common exemptions are Large Operating Companies and Inactive Entities.
An entity is considered a large operating company if it has 20 or more full time employees (average of 30 hours a week) the tax return from the previous year reported more than $5,000,000 in gross receipts or sales (this includes receipts or sales of other entities owned by the entity and other entities through which the entity operates), and the entity has an operating presence at a physical office in the United States.
An entity considered an inactive Entity for purposes of the reporting requirement if the entity was in existence on or before January 1, 2020, the entity is not engaged in active business, the entity is not owned by a foreign person, the entity has not experienced any change in ownership in the preceding twelve-month period, the entity has not received any funds in an amount greater than $1,000 in the preceding twelve month period, and the entity does not hold any type of assets.
Other types of Exempt Entities:
• Certain types of securities reporting issuers
• A U.S. governmental authority
• Certain types of banks
• Federal or state credit unions as defined in section 101 of the federal Credit Union Act
• Any bank holding company as defined in section 2 of the Bank Holding Company Act of 1956, or any savings and loan holding company as defined in section 10(a) of the Home Owner’s Loan Act.
• Certain types of money transmitting or money services businesses
• Any broker or dealer as defined in section 3 of the Securities Exchange Act of 1934 and that is registered under section 6 or 17A of that Act
• Certain other types of entities registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934.
• Certain types of investment companies as defined in section 3 of the
• Investment Company Act of 1940, or investment advisers as defined in section 202 of the Investment Advisers Act of 1940.
• Certain types of venture capital fund advisers.
• Insurance companies defined in section 2 of the Investment Company Act of 1940.
• State-licensed insurance producers with an operating presence at a physical office within the United States, and authorized by a State, and subject to supervision by a State’s insurance commissioner or a similar official or agency.
• Commodity Exchange Act registered entities.
• Any public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002.
• Certain types of regulated public utilities.
• Any financial market utility designated by the Financial Stability Oversight Council under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010.
• Certain pooled investment vehicles.
• Certain types of tax-exempt entities.
• Entities assisting a tax-exempt entity.
• The subsidiaries of certain exempt entities.
Please contact Tiffany at (480) 269-2088 or by email at info@resilientellc.com for more information to get started.
