Harris Beach is warning business owners of a recent scam involving the Corporate Transparency Act (CTA). The Financial Crimes Enforcement Network (FinCEN) has issued an alert about fraudulent attempts to solicit information from individuals and entities subject to the CTA.
The CTA scam uses fraudulent correspondence that may be titled “Important Compliance Notice” or something similar and asks the recipient to click a link or scan a QR code. Do not click, scan, or respond to e-mails or letters attempting to solicit CTA information. Note that FinCEN does not send communications requesting CTA information from individuals and entities. In addition, FinCEN does not even start accepting reports under the CTA before Jan. 1, 2024.
Starting in 2024, most companies, LLCs, partnerships, and other entities in the United States will be required to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. Estimates of the number of reporting companies having to report beneficial ownership information (BOI) to FinCEN range from 25 to 40 million.
Beneficial owners are defined as those with “substantial control” (those who direct the company, have appointment or removal authority, and senior officers) and individuals with a 25 percent or more ownership interest in the company, either directly or indirectly. The reporting companies must also report information about the company itself (such as name, address, and EIN), the “beneficial owners” and their information (such as name, date of birth, address, identification number or a copy of an identification document), and the “company applicant” (those who create or register the company and those directly responsible for directing or controlling the application for a reporting company created on or after January 1, 2024).
Reporting companies created in 2024 will have 30 days to file BOI with FinCEN. Any reporting company currently in existence or created before January 1, 2024, will have to file BOI with FinCEN no later than January 1, 2025. The intentional misreporting of BOI and the failure to report BOI to FinCEN are subject to civil and criminal penalties under 31 USC § 5336.
Harris Beach attorneys are monitoring implementation of, and compliance with, the Corporate Transparency Act. If you have questions or would like more information on this topic, please reach out to Constantine P. Lizas at (202) 975-9780 and email@example.com, or to the Harris Beach attorney with whom you most frequently work.