New Reporting Requirements for Businesses Are Coming | USTaxAid

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New Reporting Requirements for Businesses Are Coming

Written by Diane Kennedy, CPA on January 18, 2023

The Corporate Transparency Act (CTA) was passed in 2021. It requires business entities to register and provide information to the Dept of Treasury’s Financial Crimes Enforcement Network (FinCen).

It took a while for the CTA to roll out the regulations and to set the date when they all become effective. We know that now.

Effective 1/1/2024, all business entities must register with FinCen.

Exceptions to CTA Reporting

Publicly traded corporations and heavily regulated businesses are exempt from CTA reporting. Also, if a business has:

Less than 20 full time employees,

Physical presence in the US, and

Filed a tax return in the prior year showing more than $5 million in gross sales.

Highlights of CTA

We will be talking about CTA more as we get closer to the reporting deadline (1/1/2023). For now, let’s look at some of the highlights.

FinCen estimates that 30 million entities will need to file.

All business entities, including disregarded entities, are required to file. This also includes business trusts.

The companies will need to file a beneficial owner information report including name, date of birth and residential address. Plus, the owners must provide a driver’s license or passport.

Beneficial owners could be:

Anyone who owns 25% of more of the company, and/or

Anyone who directly or indirectly exercises substantial control over the company.

If there is a change in beneficial owner info, it must be updated with FinCen within 30 days.

Report must include those who help form the business entity.

Although we haven’t seen how the reporting will be done yet, most likely you will need to file using an EIN (employer identification number). If you don’t have an EIN yet, it’s a good time to get one by filing a Form SS-4 online with the IRS.

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