Just in case you missed the post back in Dec '22 in the Law & Legal area. Posting in the General Minerals Rights area. Don’t panic, just get informed.
My attorney has been keeping us on top of this, but not all folks may know about it.
“The Corporate Transparency Act (CTA) of 2020, a part of the Anti-Money Laundering Act, is set to go into effect as of 1/1/24 with consequences for most LLCs, LPs, LLPs, and Corporations. Administered by FinCEN, this initiative mandates reporting by individuals in control or with beneficial ownership of a non-exempt entity (exemptions are primarily for large businesses with revenue over $5,000,000 or more than 20 employees). New entities that are created in 2024 must file a report on the entity and those persons with control and/or beneficial interest within 90 days of the new entity’s creation. Filing via www.fincen.gov starts Jan 1, 2024. Stay informed—this affects anyone managing or owning a registered entity.”
Contact your attorney or CPA to see if you are affected and determine how CTA will affect your businesses and provide guidance on properly registering.
Entities which were created in 2023 or prior years do not need to file until January 1, 2025. Ridiculous date since it is a holiday so you really need to file by some time in December 2024. It is an example of extreme government overreach as you must report each beneficial owner’s name, birth date, address, driver’s license or passport along with photo of the driver’s license or passport. It is a way to circumvent federal shielding of information gathered by IRS for tax returns.
Year’s ago most documents filed in the Court House’s in Texas required the SS#! That was stopped a number of year’s ago. But if it has to be filed for LLC’s and such how do the expect to keep the SS# private?
FYI, CTA relates to “Beneficial Owners” only (see below) and does not include reporting of the SSN. However, name, address, passport or driver’s license #, and image of passport or license is required.
“A beneficial owner is any individual who, directly or indirectly, (a) owns or controls 25% or more of the entity’s ownership interests; or (b) exercises substantial control over an entity (e.g., a senior officer), whether or not such person has any ownership interest in the entity. Note that the CTA is looking for disclosure about natural persons, so there will need to be a look-through of entity owners to determine beneficial ownership.”
A single member LLC that uses its member’s social security number as its Tax ID will have to report the SSN unless LLC obtains EIN. if a complex trust is a 25% owner, the trustee’s information is reported and if trust has a trust protector, his or her information may have to be reported as well as a beneficiary who has a lifetime power of appointment. The real fun begins with a complex capital structure with various classes of equity and different voting rights or if options or warrants have been issued.
This law is a mess, for those involved with multiple companies it is possible to obtain a FinCen Identifier which lessens the burden on the reporting companies.
For companies in existence prior to 2024, the deadline for filing is before 1/1/2025 (ie 12/31/2024). You will need a copy of a government issued identification in digital form capable of being uploaded (pdf, jjpg, etc.).
The law and regs are a mess. They will catch more good guys than bad guys with this law.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
I was required to file since I own a small business. I completed my filing right after New Years to “get it finished” since I have other priorities. Although I disagree with the basic premises of the law, I did not find the filing to be overly burdensome (a copy of my Driver’s License was required for log-in purposes). For me, it’s just another federal document submittal that a business owner must track and manage.
For those of you involved with multiple companies, you might consider obtaining a FinCEN identifier.
Also, the filing is not necessarily a one and done event. The report must be updated anytime an individual’s name or address changes. (It also requires update if the individual’s birthdate changes, but I assume that this would be never).
For businesses with multiple Beneficial Owners, it may be important to ask/require them to obtain a FinCEN identifier.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.