The implementation of the Corporate Transparency Act (CTA) marks a significant shift in the reporting requirements for foreign-owned U.S. LLCs. As a seasoned CPA at O&G Tax and Accounting, I have compiled answers to the most common questions to help entities navigate this new landscape:
- What is the Corporate Transparency Act? The CTA, effective January 1, 2024, mandates certain U.S. and foreign entities to report beneficial ownership information to FinCEN. It aims to prevent money laundering and terrorist financing.
- What Should Foreign-Owned U.S. LLCs Do? Ensure compliance by understanding your entity’s reporting obligations under the CTA and preparing to submit the required information.
- Who Qualifies as a Reporting Company? Reporting companies include domestic corporations, LLCs, and similar entities, as well as foreign entities registered to do business in the U.S.
- What Information Must Reporting Companies Provide? Companies must submit their legal name, trade names, address, jurisdiction of formation, and Company Identification Number, along with details of beneficial owners and company applicants.
- Who is a Beneficial Owner? A beneficial owner is an individual who, directly or indirectly, exercises substantial control over a reporting company or owns at least 25% of its ownership interests.
- What is a Company Applicant? The person who files the document creating or registering the company in the U.S. If multiple individuals are involved, the primary person responsible for the filing is the company applicant.
- What Details are Required for Beneficial Owners and Company Applicants? Full legal name, date of birth, business (for applicants) or residential (for beneficial owners) address, unique identifying number from an identification document, and an image of said document.
- Can a FinCEN ID Replace Personal Information? Yes, a beneficial owner or company applicant can provide a FinCEN ID instead of personal details, subject to FinCEN’s verification.
- What is the FinCEN Identifier? It’s a unique number assigned by FinCEN to an individual or entity, which can be used instead of personal details in reports.
- When are Reports Due? For entities formed or registered before January 1, 2024, reports are due by January 1, 2025. Entities formed or registered in 2024 have 90 days post-registration to file.
- What About Confidentiality and Data Security? BOI will not be publicly accessible and will be heavily safeguarded. Access is restricted to authorized government and financial institutions under specific conditions.
- What Happens If Information Changes? Companies have 30 days to update their reports if there are changes in beneficial ownership or other relevant information.
- What Triggers an Updated Report? Changes in beneficial ownership, company applicant details, or company information like a change in address.
- Are There Exceptions to the Reporting Requirements? Yes, exceptions include minor children, nominees, intermediaries, employees, inheritors, and creditors under certain conditions.
- Which Entities are Exempt from the CTA? Twenty-three types of entities, mostly those already under substantial federal or state regulation, are exempt.
- What are the Penalties for Non-Compliance? Willful failure to report or providing false information can result in civil and criminal penalties.
- How Can O&G Tax and Accounting Assist? Our expertise in international tax law and the new CTA requirements makes us an ideal partner for foreign-owned LLCs. We offer comprehensive assistance, from determining your reporting obligations to preparing and filing reports.
Stay compliant with the CTA and protect your business from penalties. Reach out to O&G Tax and Accounting for comprehensive assistance. If you prefer to handle reporting independently, visit FinCEN’s Beneficial Ownership Information Filing System online to file your report. Visit https://www.fincen.gov/boi for more information and assistance.
