Beneficial Ownership and the Transparency Act

Have you heard rumblings about some new reporting about to go into effect for January 1, 2024? I'm hearing people say things happening with FinCEN, with the SEC or with the IRS. Nobody's really sure who's in charge of this, but we're going to clarify it and knock this out for you. The answer is yes, there is new reporting set to go in effect for January 1, 2024, where you'll have to report ownership of any entities where you own more than 25% ownership interest, you have substantial control of that company. Now where we report that it's going to be under the federal government, they're looking to stop opportunities for money laundering, terrorism, all these types of things where people form entities to hide activities and nobody really knows who the owners are. That's what they're trying to eliminate or stop here. There are some exemptions to this reporting. If you're a publicly held company owner, you don't have to report that. It's already in the SEC documents that are filed already. So that's an exemption. Many nonprofits or larger operating entities may be exempt from this. There are 23 different exemptions at this point. But for the most part, the mom and pops, the smaller entities, family owned businesses, you're going to be subject to this reporting. What has to be reported? Well, first, if you have an entity, a corporation, C Corp or an S Corp, a limited liability company, or any entity formed through the Secretary of State, those are the entities we're talking about that are subject to this new reporting requirement. What gets reported? The legal name of the company, their trade names, their tax ID number, where they're formed, what state, and their business addresses, also the beneficial owners or anybody who owns one, more than 25% with substantial control. And you'll need to report the legal name of the person, the date of birth, home address, have information from a photo ID, like a passport or a driver's license, and the ID number for that photo id that will be what gets reported. Now the big question, when, when does this all have to be reported? Well, first, if your entity is already in place as of January 1, 2024, you will have until January 1, 2025 to make sure that you have reported everything properly. So we have one year to get all this reporting in full. The real trick here though, comes for entities formed in 2024. So if you form a new LLC, and that could just be because you bought a piece of rental property and you want to hold it in an LLC for legal protection, you need to register that within Tencent, within 90 days of the formation of the entity. Now they're talking about big penalties if you don't do this reporting. So we want to make sure that you're covered. And, you know, unaware of this new reporting requirement, after 2024, you have 30 days to report beneficial ownership of any new entities. So keep that in mind as we start looking at how you form an entity, there'll be one extra step and that is that beneficial owner reporting. We are in the works of trying to navigate this water for you and help you understand if we can help our clients with this beneficial interest reporting. There's a little question as to who is going to be able to help. Is it in the business of law? Is it something accountants can do? Who's going to be subject to being able to help with this project? So we'll keep you posted. We got our eye on this one. But if you hear those little rumblings coming about it, you'll be the first to know that you heard it from calculated moves.