0
0
Subtotal: $0.00

No products in the cart.

No products in the cart.

2024 Corporate Transparency Act (CTA)

On January 1, 2024, the Corporate Transparency Act (CTA) took effect and governs corporations, limited liability companies, and other similar entities created in or registered to do business in the United States. Beginning January 1, 2024, domestic and foreign reporting companies must file reports with Financial Crimes Enforcement Network (FinCEN) that provide information about the reporting company, beneficial owners, and company applicants, if applicable. 

Not all companies are required to report BOI to FinCEN under the Final Rulemaking. Companies are required to report only if they meet the Final Rulemaking’s definition of a “reporting company” and do not qualify for an exemption.

The first step is to determine whether your company is a “reporting company,” and then whether the reporting company is exempt from the reporting requirements.

508s are Exempt

  • A legal entity that is a church (including Integrated Auxiliaries of a Church and Conventions or Associations of Churches), a charity, a nonprofit entity, or other organization under section 501 (26 U.S.C. § 501) of the Code and is exempt from income tax under section 501(a) (26 U.S.C. § 501) of the Code is exempt and will remain exempt for a period of 180 days following the loss of its tax-exempt status.
  • A charitable trust or charitable split interest trust described under section 4947(a)(1) or (2) (26 U.S.C. § 4947) of the Code is exempt.
  • See Chapter 1.2 (Exemption #19) of the Guide and FAQ L.1 (Beneficial Ownership Information Reporting Requirements Small Entity Compliance Guide, December 2023 – Version 1.1)

More Information about the Corporate Transparency Act (CTA)

This new federal law is expected to affect about 32.6 million small and medium-sized businesses in unregulated industries during its first year, and 5 million additional companies each year in years 2-10. If the Act applies, a company may be required to report information about the people who own or control it—the company’s beneficial owners—to the U.S. Treasury Department’s Financial Crimes Enforcement Network or FinCEN. If a business is otherwise regulated or larger in size than small or medium under the CTA, exemptions may apply. If a company is subject to an exemption, it will not have to comply with the CTA unless circumstances change. The CTA requires smaller and medium-sized businesses to file with a national database in 2024 based on their date of formation. Ongoing monitoring and notification of changes in their reported information are also required, with only a short 30-day turnaround time for reporting such changes. The “reporting company”– any firm subject to the CTA’s reporting requirements–is responsible for the filing, and the filing requires three categories of information: (1) Reporting Company information; (2) Beneficial Owner information (“BOI”); and (3) Company Applicant information (only required if the entity is formed on or after January 1, 2024).

Reporting company reports must include information such as legal names and trade names or DBAs, addresses, the jurisdiction of formation or registration, and taxpayer identification numbers (TINs). Beneficial owner and company applicant reports are provided at the individual level and must include legal name, birthdate, address (in most cases, a residential street address), an identifying number from a driver’s license or passport (or other approved document), and an image of that approved document. In most instances, the information must be updated any time the reported information is changed. This process can be somewhat simplified by applying for a FinCEN identifier (which is optional), after which the individual is allowed to use the identifier number rather than submit personal information for each report subject to updating requirements.

Violations of the reporting obligations can incur (a) a civil penalty of not more than $500 for each day that the violation continues or has not been remedied; and (b) a fine of not more than $10,000, imprisonment for not more than two years, or both. The statute and regulations do, however, limit violations to willful conduct.

The CTA may involve the following businesses and industries in particular: Agriculture, Real Estate, Construction, Estate Planning, Privately Held Businesses and Enterprises, Developers, Franchises, International, Corporate, Intellectual Property, Mergers and Acquisitions, Wealth Planning, Entertainment, Tribal Entities, and Alaska Native Corporations.

 

“The I.R.S. examined 1.4 million individual income tax returns in 2010, about 1 percent of the total number filed. In 2018, the latest year with available data when Republicans started making these claims, audits decreased to 370,000, or about 0.2 percent… The budget office estimated increasing I.R.S. funding would return enforcement to its 2010 levels. Doing so would result in about 1.2 million more audits; of those, 583,000 would target people making less than $75,000.”

The New York Times, “Fact-Checking the Misleading Claim About 87,000 Tax Agents”, November 6, 2022

“…For example, you educate believers on national issues that are central to their belief in the Bible as the inerrant Word of God. Specifically, you educate Christians on what the bible says in areas where they can be instrumental including the areas of sanctity of life, the definition of marriage, biblical justice, freedom of speech, defense, and borders and immigration, U.S. and Israel relations. The bible teachings are typically affiliated with the Republican party and candidates. This disqualifies you from exemption under IRC Section 501(c)(3).”

Stephen A. Martin, IRS Director, Exempt Organizations, Rulings and Agreements