New Reporting Requirement Impacting Unsuspecting Small Businesses

In 2021 Congress passed the Corporate Transparency Act aimed at reducing money laundering. It is a small business reporting requirement with potential penalties including prison for committing a felony by not reporting. Let me repeat that failing to fill out this form is a potential felony with two years of prison time, plus a potential $500 daily penalty.

If your business is an LLC or corporation, including a single member LLC, you must fill out this form by the end of 2024, and if you start a new business in 2024, you must report within 90 days of formation. Reporting is done with a special electronic filing with the Treasury Department’s Financial Crimes Enforcement Network (Not the IRS).

The required information includes owners and, for new businesses formed in 2024, the company applicants. To clarify, even if you have set up an LLC just to own a rental property this form is required, and a separate filing and form is required for every single entity, whether an LLC, an S corporation, or a C Corporation. Some exemptions exist, primarily for larger companies and not-for-profit entities. We are particularly concerned about folks that have set up their own LLC online, for whom the potential filing penalty is also $500 for each day late plus potential prison time.

We are able to complete this form for you, but only with your specific written authorization. We will charge a fee to complete this form, which we currently estimate at $450 per entity. To fill out the form the following information is needed:
 

For the Company or Entity:

1. __ Full legal name according to the Secretary of State (download a “good standing” report),

2. __ Any trade and “doing business as” names,

3. __ A complete current street address of the principal place of business (A P.O. Box or the address of a 3rd party agent does not comply with this requirement),

4. __ The state, tribal or foreign jurisdiction of formation,

5. __ The IRS Taxpayer Identification Number.

   A change of any of these 5 items at any time must also be reported within 30 days to the Financial Crimes Enforcement Network, including an address or owner change.

For the Owners and Applicants:

For each owner of at least 25% of the entity (directly or indirectly), the reporting must include for each owner:

1. Legal name and date of birth,

2. Address,

3. Unique identifying number and the issuing jurisdiction from one of the following documents: (i) a non-expired passport issued to the individual by the United States government, (ii) or a non-expired identification document issued to the individual by a State, local government, or Indian tribe for the purpose of identifying the individual, (iii)or a non-expired driver’s license issued to the individual by a State, or (iv) a non-expired passport issued by a foreign government to the individual, if the individual does not possess any of the other documents described, and

4. An image of the document from which the unique identifying number (above #4) was obtained. Additionally, the rule requires that reporting companies created after January 1, 2024, provide the four pieces of information and document image for company applicants.

---

If you wish for us to fill out this entirely new form, which is totally unrelated to IRS income tax filing, we will need the following items:

__ A signed engagement letter,

__ The above 4 items for each owner, with a photocopy of a current driver’s license or passport for each owner, (This document normally includes your legal name, date of birth and identifying number)

__ The percentage of ownership of each owner

For the company we need to confirm your street address and we will download your “good standing” report,

__ If you have legally filed a “doing business as (DBA), we need a copy of the approval letter,

__ Confirmation of your state of organization,

__ If formed on or after January 1, 2024, we need to know the above 4 items for the applicant.
 

Because of the incredible amount of confidential information that must be provided, we strongly emphasize that you do NOT use unknown 3rd party solicitors, which we expect to soon emerge, because they could use this confidential information to steal your or your company’s identity or data.