Corporate Transparency Act: Have You Filed?

In a recent episode of the TaxSmart REI Podcast, hosts Thomas Castelli and Ryan Carriere are joined by Heather Lucor and Isaac Fishman from FinCEN Filing Agents a division of Edgar Agents to discuss the Corporate Transparency Act, including upcoming deadlines and how to file.

The 2024 Corporate Transparency Act (CTA) is here, and it’s a game-changer for business owners, especially real estate investors. Whether you own an LLC, partnership, or other entity, this act introduces new compliance requirements that you can’t afford to ignore. In this post, we’ll break down the CTA, its implications, and how to ensure your compliance.

What Is the Corporate Transparency Act?

The Corporate Transparency Act is a new regulation designed to combat financial crimes such as money laundering, tax evasion, and terrorist financing.

By requiring greater transparency around business ownership, the act targets small to medium-sized businesses while exempting publicly traded companies and certain large businesses.

FinCEN Filing Agents’ CEO Heather Lucore explains:

“The IRS and Treasury lacked a directory of beneficial owners for reporting companies. With over 64,000 financial crime cases reported in 2023, the CTA is a step toward reducing these crimes.”

This act is not just about compliance—it’s about creating a more transparent financial landscape.

Who Is Required to File?

The CTA applies to both domestic entities and foreign entities registered in the U.S. It also includes Native American tribes unless they meet one of 23 exemptions.

Key exemptions include:

• Businesses with over $5M in revenue.
• Entities with more than 20 employees in the U.S.
• Businesses with a physical office in the U.S.
• However, most small businesses and real estate investors won’t qualify for exemptions. If you own an LLC or partnership for your real estate investments, you’ll likely need to file.

What Information Do You Need to Report?

Filing requirements include basic information about your company and its owners, such as:

• Employer Identification Number (EIN).
• Legal name and address of the business.
• Full name, address, and government-issued ID details for each owner.

While straightforward, gathering this information can be time-consuming, especially if you have multiple owners. That’s where platforms like FINSEN Filing Agents come in, simplifying the process and securing sensitive data.

Deadlines and Penalties

Compliance is time-sensitive.

Here are the key deadlines to know:

• Existing entities: File by January 1, 2025.
• New entities in 2024: File within 90 days of formation.
• Entities formed in 2025 and beyond: File within 30 days.

Failure to comply carries steep penalties:

• Civil fines of $500/day.
• Criminal fines of up to $10,000 and two years in prison for willful violations.

“This isn’t something to delay,” says Heather. “Penalties can quickly add up, and ignoring the requirements isn’t an option.”

How to Handle Changes

The CTA also requires timely updates for changes in ownership or other business details. If a new owner is added, someone leaves, or a listed address changes, you must update the report within 30 days.

Platforms like FinCEN simplify this process by allowing updates to be completed securely and efficiently, even offering discounts for update filings.

Addressing Privacy Concerns

Many business owners are concerned about the privacy of their sensitive information. Fortunately, CTA filings are not public. Data is stored securely and accessible only to authorized government agencies, such as the Department of Treasury and the IRS.

However, scams targeting businesses are on the rise.

Heather cautions:

“Make sure any third-party vendor you use is certified by FinCEN. Verify their credentials on the official FinCEN website to avoid scams.”

Why Are Some Businesses Delaying Filing?

Despite the straightforward process, millions of businesses have yet to file.

According to Heather and Isaac, the reasons include:

• Legal uncertainty: Some business owners hoped lawsuits challenging the CTA would succeed.
• Procrastination: Many are waiting until the last minute, hoping the requirements will go away.

Isaac points out:

“This act is here to stay. Waiting only increases stress and risks missed deadlines. Don’t wait until December 2024 when millions of others are trying to file at the same time.”

How to Ensure Compliance

• Start Early: Avoid the last-minute rush and ensure you have all the necessary documents.
• Use a Filing Platform: Platforms like FinCen Filing Agents streamline the process, saving you time and securing your information.
  • FinCEN (Financial Crimes Enforcement Network) is part of the U.S. Department of the Treasury and enforces the CTA. “FinCEN Filing Agents” is a third-party filing service provider. They are not part of FinCEN but help businesses file with FinCEN.
• Stay Informed: Keep up with any changes or updates to the requirements.

Heather adds:

“Filing early not only avoids penalties but also reduces stress. Our platform simplifies the process so you can focus on your business.”

Get Help Filing Your Reports

If you’re ready to file your CTA reports, consider working with FinCEN Filing Agents.

Their platform allows you to save progress, invite owners to upload their documents securely, and make updates with ease.

Final Thoughts

The Corporate Transparency Act is a significant change for real estate investors and business owners.

Compliance is not optional, and the penalties for non-compliance are steep. Start now to ensure you meet the deadlines and protect your business from unnecessary fines or complications.

If you have questions about the CTA or need assistance with filing, reach out to the experts at FinCEN Filing Agents. And remember, procrastination isn’t a strategy—stay ahead of the curve!

Intro: 0:00 – 0:31

Host:
You’re now listening to the Tax Smart REI Podcast, the number one tax podcast for Real Estate Investors.

Thomas:
Hey, thanks for tuning into this week’s episode of the Tax Smart REI Podcast. Today, we’re joined by Isaac Fishman and Heather Lucore from FinCEN filing agents. We’re diving into the 2024 Corporate Transparency Act (CTA). Whether you own LLCs or other entities, this episode is crucial as we head into 2025.

Overview of the Corporate Transparency Act: 0:31 – 2:30

Thomas:

The CTA, effective in 2024, introduces new reporting requirements for business owners to increase transparency and combat financial crimes like money laundering and tax evasion. Even if you’ve heard about the CTA, this is not something you want to miss.

Guest Introductions: 2:30 – 4:00

Thomas:
Isaac and Heather, welcome to the show! Can you give us a quick breakdown of who you are and what you do?

Heather:
Sure! I’m Heather Lucore, CEO of FinCEN Filing Agents, a company formed in 2024 to address compliance filings, particularly for the CTA.

Isaac:
I’m Isaac Fishman, Sales Manager and Product Specialist at FinCEN Filing Agents. We’re a sister company to Edgar Agents, a 16-year-old compliance firm specializing in SEC filings.

What Is the Corporate Transparency Act?: 4:00 – 6:10

Thomas:
For those who need a refresher, what exactly is the CTA, and why was it introduced?

Isaac:
The CTA combats financial crimes like money laundering, tax evasion, and terrorist financing. It focuses on small to medium-sized businesses, requiring them to report ownership details to increase transparency.

Heather:
The IRS and Treasury previously lacked a directory of beneficial owners for reporting companies. With over 64,000 financial crime cases in 2023, the CTA is a significant step toward reducing these issues.

Entities Covered and Exemptions: 6:10 – 8:40

Thomas:
What types of entities are covered, and are there exemptions?

Heather:
The CTA covers domestic entities, foreign entities registered in the U.S., and Native American tribes unless they meet one of 23 exemptions.

Isaac:
Key exemptions include businesses with over $5M in revenue, more than 20 employees, or a physical U.S. office. Other exemptions include publicly traded companies, banks, and tax-exempt entities.

Reporting Requirements: 8:40 – 11:02

Thomas:
What are the reporting requirements, and what information needs to be included?

Isaac:
The filing requires basic information, including the company’s EIN, legal name, address, and owner details like name, address, and ID information. It’s simple but requires accuracy.

Heather:
One challenge is collecting IDs from all beneficial owners. To streamline this, our platform allows owners to upload their documents directly, saving time and maintaining security.

Compliance Deadlines: 11:02 – 14:00

Thomas:
What are the key deadlines for filing?

Heather:
Existing entities must file by January 1, 2025. Entities formed in 2024 have 90 days to file, and starting in 2025, new entities will have 30 days.

Penalties for Non-Compliance: 14:00 – 16:45

Ryan:
What penalties could businesses face for non-compliance?

Heather:
Civil penalties are $500/day for non-compliance, with criminal penalties reaching $10,000 in fines and up to two years in prison for willful violations.

Isaac:
This isn’t something to delay. Many entities still need to file, and fines could quickly add up.

Updating Reports and Common Challenges: 16:45 – 19:30

Thomas:
What happens if there are changes to ownership or business details?

Isaac:
You must update reports within 30 days for changes like adding or removing owners, address updates, or ID changes. Our platform offers discounts on updates to ease the burden.

Heather:
Most delays occur from gathering owner documents. Using our invite feature allows owners to upload their IDs securely, saving time.

Privacy Concerns: 19:30 – 22:00

Thomas:
How is sensitive information protected, and are there risks of scams?

Heather:
CTA filings are secure and not accessible to the public. However, scams targeting businesses are rising, so it’s vital to verify third-party vendors through the FinCEN website.

Isaac:
Only authorized government agencies, like the IRS and Treasury, have access to the data.

Common Misconceptions About the CTA: 22:00 – 25:00

Thomas:
Why are so many businesses delaying their filings?

Heather:
Some hoped lawsuits challenging the CTA would succeed, but recent rulings indicate the act is here to stay.

Isaac:
Others underestimate the complexity of gathering information. Many states are also introducing additional BOI requirements, making compliance essential.

CTA Compliance Tips: 25:00 – 27:30

Ryan:
What tips do you have for listeners to ensure timely compliance?

Isaac:
Don’t wait until December 2024. The FINSEN filing system can experience delays when millions try to file simultaneously. Start early to avoid issues.

Heather:
Procrastination increases stress and risks missing deadlines. Our platform simplifies the process, helping businesses file efficiently.

How to Work with FinCEN Filing Agents: 27:30 – 28:45

Thomas:
How can listeners get started with your services?

Heather:
Visit our website at www.edgaragents.com. Schedule a demo to see how our platform simplifies the filing process.

Isaac:
We offer tailored solutions for real estate investors and small businesses. Let us handle the filings, so you can focus on your investments.

Closing Remarks: 28:45 – 29:30

Thomas:
Thanks for joining us! If you own an LLC or other entity, don’t delay your filings. Penalties are steep, and the deadlines are closer than you think.

We’re also accepting new clients—book a free consultation. If you’re a CPA or EA looking for a career change, reach out to us at onboarding@wholecpallc.com.

See you next week on the TaxSmart REI Podcast!

Disclaimer: This podcast summary and transcript were partly generated and may contain some errors or miss key points from the audio recording.