New Federal Reporting Requirements Business Entities.

Congress has passed the Corporate Transparency Act ("CTA"), which went into effect on January 1, 2024. The purpose of the CTA is to prevent bad actors to hide funds through complex ownership structures. The disclosure requirement applies to most LLCs, closely held corporations and similar entities ("business entities').

The CTA requires existing companies to disclose their "beneficial ownership information" ("BOI") to the Financial Crimes Enforcement Network ("FinCEN"). Beneficial owners are individuals who, directly or indirectly, own or control a significant portion of a reporting company.

The deadlines for reporting are as follows:

a) For any business entity created or registered prior to January 1, 2024, you will have until January 1, 2025, to report the business entities' beneficial ownership information.

b) For any business entity created or registered in the year 2024, the BOI information must be reported within 90 calendar days after receiving actual or public notice that the business entity's creation is effective; that is, when the Arizona Corporation Commission ("ACC") accepts the Articles as "filed."

c) For any business entity created or registered on or after January 1, 2025, you must report information within 30 calendar days after the ACC accepts the Articles as "filed."

The information required to be reported includes full legal names, residential addresses, dates of birth, and identification numbers. Under the CTA, this disclosed information is not made public, but can be used by law enforcement and certain government agencies for investigative purposes.

The CTA sets out that failure to report BOI may subject violators to penalties of up to $500 for each day that the violation continues. Violators may also be subject to criminal penalties.

The Department of the Treasury has stated that reports will begin being accepted on January 1, 2024. However, as of January 3, 2024, the form to report was not yet available. To determine when the reporting form is available on the FinCEN website, check www.fincen.gov/boi.

The reporting process is expected to be simple enough that business entities can complete the process without the assistance of an attorney or accountant. FinCEN will not charge a fee for submitting the beneficial ownership information report.

Sharon D. Ravenscroft and M. Scott Rowan, Esq, handle matters of estate planning and proper titling of assets to avoid probate, including ownership in business entities.