The Corporate Transparency Act (CTA) aims to make it harder for criminals to use business entities to move money and use it nefariously. No matter how squeaky clean landlords and real estate professionals are, we have to comply.

If we haven’t filed a Beneficial Ownership Report (BOI), we need to get it done now before we incur the wrath of the federal government. For businesses created or registered before January 1, 2024, the BOI report must be filed by January 1, 2025.

For those of us planning on starting a company in 2024, the report must be filed within 30 days of receiving an actual or public notice that the company has been officially created and registered.

What is the intent of the law?

The federal law passed in 2021 makes it harder for criminals to commit tax fraud, launder money, buy assets anonymously, and finance illicit activities.

Essentially, the government wants to know how money is moving around and where it is going. Is the entity engaging in corruption, tax fraud, or funding a terrorist organization, for example? Big Brother is watching.

Who is impacted by the law?

Specifically, CTA requires businesses to register any “beneficial owner” of a Limited Liability Company (LLC), C-Corporation, or S-Corporation if they employ fewer than 20 employees or receive under $5 million in cash receipts. Larger businesses already subject to substantial regulations are exempt. Other exemptions apply, but let’s not get lost in the weeds.

It’s been estimated that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) will have a broad reach impacting over 32 million entities, including smaller operations like landlords who may not know the deadline is coming.

Sounds scary, right? The “Financial Crimes Enforcement Network” of the feds. It is scary and trust us, business owners do not want to cross their paths. We know that there is a vast number of housing providers who have businesses in LLCs and other ownership structures, so the landlording and real estate community need to get on top of this.

You might ask who is a “beneficial owner?”

This is anyone who exerts substantial control over the reporting company or owns or controls a 25% ownership stake in the company. Let’s say there are four owners of the company, each owning a 25% share. All four owners' information must be reported.

What are the penalties for not complying? 

Failure to file a BOI report can result in fines of $500 per day, which can add up pretty quickly. If there is any good news, fines are capped at $10K but we don’t want to reach that ceiling. Offenders can also face criminal penalties and imprisonment of up to two years.

How to file?

The BOI report can be filed electronically here:

 

 

 

 

 

 

 

https://boiefiling.fincen.gov/