The Corporate Tranparency Act (CTA) & Your Business
The Corporate Transparency Act (CTA) became effective on January 1st, 2024.
If you have a business in the Homebuilding or construction industry, here is some information on the CTA.
Congress enacted the Corporate Transparency Act in 2021 to prevent the use of anonymous shell companies for money laundering, tax evasion, and other illegal purposes.
It Imposes a brand-new federal filing requirement on most corporations, limited liability companies (LLC); limited partnerships, and certain other business entities.
This law will create a massive governmental database containing the identities and contact information of defined small corporate and LLC “beneficial owners”.
THERE are penalties for non-compliance.
New and existing small businesses will have to file a Beneficial Ownership Information (BOI) report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
These BOI reports must disclose the identities and provide contact information for all of the entity’s “beneficial owners”: the humans who either control 25% of the ownership interests in the entity or exercise substantial control over the entity.
Here are some things we thought we would share with you, our member:
- Businesses created during 2024 that are subject to CTA must file a BOI report within 90 days of formation.
- Businesses created before 2024, have until December 31, 2024 to comply.
- BOI report is filed online in a new federal database called BOSS (acronym for Beneficial Ownership Secure System).
- There is no filing fee. The information in the BOSS database is strictly for use by law enforcement, the IRS and other government agencies and will not be publicly disclosed.
- Self-employed individuals, who have not formed an LLC or corporation for their business,
DO Not fall within the definition of a reporting company. They do not have to file a BOI. Even if they use a fictitious business (DBA) or a trade name to identify their business; obtain a business license or have an employer identification number (EIN).
- The CTA does apply to single-member LLCs, even though the tax codes disregard such entities and tax them on schedules, C, E, or F of Form 1040.
- General Partnerships that have filed documents with the secretary of state or similar official, are reporting companies that must file a BOI. Not many general partnerships are formed this way so few will have to file a report.
- Initial BOI Report Filing does not expire. However, you have an ongoing duty to keep the BOI report up to date by reporting any changes for FinCen within 30 days of occurrence.
The website for information is: https://www.fincen.gov/
*Please note that this does not constitute legal advice or direction, in any way. The above information is meant for informational purposes only.
Should you have questions, we recommend contacting your legal counsel or accountant for advice should you need it in order to comply.
