RENT Magazine Q1 '24

$500/DAY FINE LOOMS FOR RENTAL PROPERTY OWNERS WHO IGNORE NEW CORPORATE TRANSPARENCY ACT REQUIREMENTS Rental income property owners need to fully understand the Corporate Transparency Act (CTA) of 2021, a federal law that took effect on January 1, 2022. The law mandates that all “reporting companies” (LLCs, Corporations, LPs and others) must submit a report to the Financial Criminal Enforcement Network (FinCEN) of the U.S. Treasury disclosing specific information.

• Beneficial owner(s) of the reporting company. • The individual (referred to as the “applicant“) responsible for establishing the company by submitting its formation documents (such as articles or a certificate of organization, articles of incorporation, or a certificate of partnership) to a state agency, for example a Secretary of State.

THIS INFORMATION INCLUDES DETAILS ABOUT:

WHAT IS A BENEFICIAL OWNER?

CORPORATE TRANSPARENCY ACT (CTA) FINES Beginning January 1, 2024, the Corporate Transparency Act began enforcing reporting companies to file. Failure to file a FinCEN report by the due date can result in significant fines. Specifically, FinCEN can impose a $500/day fine for each day that the Corporate Transparency Act form remains overdue. The CTA also includes provisions for criminal penalties in cases of willful violations of the law.

A beneficial owner is defined as an individual who, directly or indirectly, holds substantial control over the entity or owns or controls at least 25% of the entity’s ownership interests through contracts, arrangements, understandings, relationships, or other means. If your living revocable trust holds any of your properties, then a review of your trust must be done to identify “control” persons within the terms of the trust.

FAILURE TO FILE A FINCEN REPORT BY THE DUE DATE CAN RESULT IN SIGNIFICANT FINES.

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