Corporate Transparency Act — Beneficial Ownership Information Reporting Requirement
The Corporate Transparency Act (“CTA”) was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (BOI) of certain entities from people who own or control a company.
It is anticipated that 32.6 million businesses will be required to comply with this reporting requirement. The intent of the BOI reporting requirement is to help US law enforcement combat money laundering, the financing of terrorism and other illicit activity.
The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.
Under the current structure, there is a risk that advising on and/or preparing these reports could be considered the unauthorized practice of law by CPAs. The assessment and application of many of the requirements set forth in the regulations, including but not limited to the determination of beneficial ownership interest, necessitate the need for legal guidance and direction. As a result CS&L CPAs will not advise on or assist with the direct preparation of the BOI reporting. We strongly encourage you reach out to your legal representative for assistance as soon as possible in complying with these filings.
In an effort to make our clients aware of the filing requirement, we are providing you with some general information regarding the new reporting rules as well as initial steps to take to address the implications of the CTA to your organization.
What entities are required to comply with the CTA’s BOI reporting requirement?
Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or…….