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As of Jan. 1, 2024, many businesses will be required to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) to identify those who directly or indirectly own or control the company. This requirement stems from the enactment of the Corporate Transparency Act (CTA) passed with the National Defense Authorization Act for Fiscal Year 2021.
The reporting requirements generally are applicable to small corporations, limited liability companies (LLCs) and other similar entities that:
- have 20 or fewer full-time employees; and
- filed federal income taxes in the previous year demonstrating $5 million or less in gross receipts or sales.
There are 23 types of entities that are exempt from reporting beneficial ownership. Those entities include:
- publicly traded companies meeting specified requirements
- many nonprofits
- certain large operating companies
Reporting companies that were created before Jan. 1, 2024 have until Jan. 1, 2025 to file their initial report with FinCEN. Those created in 2024 will have 90 days after receiving notice of their creation or registration to file their initial report. Those created in 2025 will have 30 days to file their report.
The CTA helps the U.S. government identify money laundering, corruption, tax evasion, drug trafficking, fraud and other crimes. Congress passed the CTA to make it harder for these illegal activities and their perpetrators to hide from law enforcement officials.
NAHB Resources and Free Webinar
NAHB has provided answers to frequently asked questions and links to key resources here.
NAHB will also host a free webinar about these new requirements on Wednesday, Jan. 17, at 2 p.m. ET. The webinar will feature David King, a senior regulations advisor at FinCEN, who will provide further details on what business owners need to do to comply.
Register here for the free webinar.
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