In this episode of Adam Talks, Adam Bergman, Esq. discusses new rules, which may go into effect as soon as January 1, 2024 from FinCEN, that will require anyone with control of an LLC to report beneficial ownership of the business to FinCEN and the IRS.
LLC Owners Alert: The Government is Coming
In this episode, Adam Bergman discusses the upcoming requirement for LLC owners to report their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN) and the IRS. The Corporate Transparency Act (CTA) will go into effect on January 1, 2024, aiming to combat money laundering, terrorism, and illegal activities. This requirement applies to all new LLCs and those created since the beginning of time, estimated to impact over 35 million Americans. However, many people, including attorneys and CPAs, are unaware of this upcoming requirement, which is considered one of the largest reaches by the federal government. There is a 50/50 chance of the requirement being pushed back due to the limited resources of FinCEN.
While there are exceptions for entities already subject to federal reporting, large operating companies, tax-exempt entities, and certain types of trusts, most small businesses, investment funds, and real estate holding companies will need to comply. The required information includes a FinCEN number, personal identification details, and documentation. Only individuals who own 25% or more and have substantial control over an LLC need to be included in the reporting if there are multiple layers of ownership.
The Corporate Transparency Act imposes penalties of up to $10,000 per day and imprisonment for up to two years for failure to comply. Privacy concerns and potential misuse of the information collected by the IRS and FinCEN are raised. Bergman anticipates potential delays in implementing the Act but stresses the importance of being prepared for its eventual enforcement.
In addition to discussing the Act, Bergman mentions his plans to expand their social media presence by incorporating platforms like Twitter, Facebook, and TikTok. He aims to target younger clients who have requested content on TikTok, while still focusing on YouTube for long-form content such as videos and podcasts. He express the need for education and awareness regarding the Act’s provisions and hope for increased public discussion and engagement.
For more information, be sure to listen to this week’s podcast.