Own an LLC or a PLLC? You Need to do this Now!

Is your counseling practice set up as an LLC or a PLLC? If so, you need to know about the The Corporate Transparency Act (CTA). The CTA, effective January 1, 2024, was enacted as part of the National Defense Authorization Act for Fiscal Year 2021, The legislation creating the CTA sought to respond to the long-standing challenge of anonymous shell companies utilized for various illicit purposes, ranging from money laundering to terrorist financing. 

The CTA requires corporations, limited liability companies (LLC), professional limited liability companies (PLLC) , as well as, “limited partnerships, business trusts, and other ‘similar entities’  that are created or registered by the filing of a document with a secretary of state or a similar Indian tribal office”, to disclose information regarding their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).  

Beneficial owners are defined as individuals with at least a 25% ownership stake or substantial control over the company.  

Non profit organizations may be exempt from the CTA.  

The main objective of the CTA is to establish a comprehensive, non-public database containing beneficial ownership information. This repository will be accessible to law enforcement agencies, serving as a vital resource in investigations related to financial crimes. In addition, the database will be accessible by financial institutions, with consent, when conducting due diligence . 

Failure to comply with the CTA can cost fines of $500 per day up to $10,000 per violation and possible jail time. 

To file your Beneficial Ownership Report (BOI) with the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of Treasury, go to FinCEN.gov. 

For businesses established before January 1, 2024, the BOI must be submitted before  January 1, 2025. For new entities created on or after January 1, 2024, the report must be filed within 90 days of the formation date.  

For questions about the CTA, readers are encouraged to contact their attorney or tax professional.  

This article was written by Micah Perkins with assistance from ChatGPT.

 
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