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Hello, my name is Siobhan Keneally.

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I am the leader State Planning Attorney at Omni 360 or also known as Omni Legacy Law or Shawn Associates.

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Today we're going to talk about the Corporate Transparency Act.

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It's something that our clients should be aware of, but we are increasingly finding that many people just do not know about this act.

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It does have the power to to really impact many of our business owners and some of our clients who maybe don't consider themselves to be business owners, but it may have an impact on them too.

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So this is quite a dense presentation.

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I'm going to try and keep the the words that I say about this presentation somewhat light and somewhat quick moving, but the content itself is quite dense and I apologize for that, but I want to make sure that we are thorough, but not too thorough.

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So let's start off.

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So initially the Corporate Transparency Act became effective this year on January 1st.

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And essentially it is a financial crimes related piece of legislation.

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And the idea is that for a long time it was felt that in the US that corporations were not transparent in the way that they were owned and who was actually owning them.

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So this is a financial crimes based of the piece of legislation, but it is impacting everybody.

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So the idea here is that every business will need to report to the Financial Crimes Enforcement Network, Vincent, who owns and who controls the business and really that's at the core of what's going on.

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Everything else about filing and who has to file is really a result of that core change, which is that now that the federal government will will want to know who controls these these these entities.

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So the starting point here is that if you have a corporation, you have an LLC, any entity that was formed by incorporating with the state, just assume that the CTA will impact it.

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That's really the starting point.

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So they are called reporting companies and essentially it is all domestic companies, corporations, LLC's that have been incorporated with the Secretary of State and foreign reporting companies that are corporations LLC's formed in a foreign country and registered to do business.

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So just really start from the position that if you have a a company that the CTA will impact it.

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There are exceptions to this.

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There are 23 notable exceptions and you'll see that they are narrow and many of them are the types of organizations and companies that will already be reporting or or or are already in highly regulated industries.

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For the general LLC that our clients have set up, it's very unlikely that these these exceptions will apply.

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So start from the position that the CTA applies to you.

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Now again, for many of our clients who have trusts, you may think well, OK, great, a trust does not have to file and that is true.

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But trusts can own companies, so they can be beneficial owners and I'll get to that a little bit more.

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Increasingly for us, the type of planning that we do at the high end includes family LLCS.

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And although those family LLCS may not appear to be businesses in any other sense, they are incorporated in the same way that LLCS that do business and transact business are.

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So they are impacted by the CTA.

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So the reporting requirement essentially the the beneficial owners of each reporting company will need to file their information with Vincent that includes full legal name, date of birth, current address, unique identifying number and a document with that unique identifying number.

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So for example, your driver's license will have a unique ID and that will be part of your filing.

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And this is where it gets a little tricky and has tracked.

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I've seen it trip up a number of very experienced practitioners here.

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So I'll talk you through the filing requirements as it relates to timing.

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So for this year, for the year we are in 2024 right now that the first year of the CTA enforcement, any new entity that is created has 90 days to file.

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So if you file it today, it is you get the the documentation back from the state, it's done today.

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You have 90 days from today to file with Vincent.

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If you have a company that already exists and you make changes to the beneficial owners, say somebody buy somebody out or there's some sort of change as to who owns and operates or who substantially controls the company that has 30 days.

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Any company that was formed before January 1st of this year and it doesn't have any changes this year.

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So pretty much any LLC, any corporation, any entity that was created before before January 1st of this year and has no changes has until the end of this year.

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So as we get further and further into 2000 and 24, you'll see that that deadline is, is fast approaching.

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And as as I'm sure we all know, the end of the year comes quickly.

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So just have those dates in mind.

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One final thing.

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So this year is slightly special.

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It's been rolled out somewhat slowly.

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But if you have, if you incorporate or create a new entity after January of next year, so that's January 1st, 2025, then you have 30 days.

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So we're in sort of a grace period right now.

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And that's what allows us to be, you know, disseminating this information and getting our clients up to speed on this.

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But very soon we're going to be in a, a regime that we just will not have a lot of time to, to provide this information.

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So this is a little bit more information about what I discussed.

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And, and so why, why is this so important?

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Well, there are both civil and criminal penalties for failure to either properly report or to to to report, but not to give the correct information or to just not report at all.

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So we're looking at prison time in some instances depending on the level and nature of the failure and then fines of up to $10,000.

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So we this is pretty serious and and the federal government is taking this very seriously.

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As I mentioned at the beginning, this is a financial crimes piece of legislation.

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So they take it very seriously and and so do we on behalf of our clients.

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So who reports?

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So we talked a little bit about the entities that report and, and so that's the reporting company, but who has to actually give that individual information is going to be the beneficial owners.

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And there's two tests that determine who the beneficial owners are, whether you have substantial control over the reporting company and whether you own and control 25% or more of the ownership interests.

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So where this becomes a little tricky and where we sometimes as attorneys are asked to to to really weigh in on this and give our opinion is this that these are distinctly sort of nebulous concept.

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So and because of the relative newness of the legislation have not been tested.

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We do not have a lot of guidance on this.

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So we're going to always just to our clients that they are the most cautious and that they over report rather than under report if there's any ambiguity.

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So substantial control really is anybody who controls the company, who has a great deal of say over what the company does, the decisions that it makes, any senior officer is going to be implicated here.

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So you can see that even though we call it beneficial ownership, that's the task actually.

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You don't need to in any way own this entity.

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You just need to have control over it to meet one of the two tasks.

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So we have president, chief financial officer, chief general counsel, chief executive officer.

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So you can see that there would be a lot of people who would be implicated in this having no actual ownership interest at all.

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So this is a little bit more about the test.

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And essentially, if you're making big decisions on behalf of the entity, you should assume that you're a beneficial owner.

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So the beneficial, the second test is about beneficial ownership, which is the 25%.

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I don't want to go too much too deep into how that is calculated.

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I would say that if you again, if, if there's any question as to whether owner of a company meets that 25% and you're just not sure, our advice is, is likely to err on the side of over reporting rather than under reporting.

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And it may be a situation where legal advice and legal counsel is advisable for you.

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And I'll talk a little bit about how filing is done at the end.

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And it may just be that you need to bring in a professional to help make that assessment.

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So complying with the CTA, the reporting company, you're going to define and determine who the beneficial owners are.

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You're going to make sure that you are in time and you have those deadlines in mind.

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And you also this is where we have great concern that our clients might get tripped up is that changes also need to be reported.

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So when we are doing that initial filing, everybody is very engaged in that initial filing with the state.

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We've set up the the company, we've got the EIN, we filed the CTA, that flurry of activity is done.

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The CTA reporting requirement is ongoing.

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So if you, if a beneficial owner changes an address, a beneficial owner becomes if something changes, even if it seems very minimal, the reporting requirement is triggered again on that 30 day cycle.

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So this is something to always be keeping in mind.

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And I think as we look at this, that could be an area where the most business owners might get tripped up.

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So I'm just going to move through this.

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So the impact here, so as we look at it now, it looks like it's going to be about 30 million entities who will be impacted by the CTA.

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So as I said at the beginning, assume that if you own any kind of entity that you are that this will impact you and start from that position.

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So what are we going to do about it?

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So the Fin CEN reporting can be done by you.

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It's an online portal website has a lot of great information there too.

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And we have a link to a lot of the data that we've put together and some information as well as some of their resources.

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So certainly follow us and make sure that you're keeping up to date on the information we're putting out to our clients.

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But it can be reported by individual companies and certainly the obligation to do so rests with the reporting company.

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So again, start from that position.

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If you have an entity that's very simple, let's say it's A1 Member LLC, the ability for you to determine who controls that LLC is going to be somewhat easy.

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You're going to know who that beneficial owner is.

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But if you have LLCS that have multiple owners, different corporate offices, it perhaps has a trust that is a part of the membership, the unit, So the the ownership of that company.

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That might then become a little bit of a trickier situation where you have many entities that you need help with.

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That might be a situation where you need to get some help in that filing.

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So it's certainly something that at Omni 360 we are helping our clients with.

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It is on the legal side because the decisions that are made and the advice that we give are ultimately legal determinations.

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But certainly reach out to us if you have any questions.

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As a closing slide, I'm going to just remind on this very, very comprehensive and long presentation, I'm going to remind you of the core elements of what you need to take away here.

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Assume this applies to any entity that you have.

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There are few limited exceptions and many of the types of exceptions are already highly regulated of large businesses already.

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For the reporting companies, entities formed before January of this year have until the end of this year as long as they didn't make changes in this year.

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If you're incorporated since January of this year, so January 2024, you have 90 days to file with FINCET and any changes at any time is 30 days.

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So it's new law, it's undecided and it we do believe it will be, it's currently subject to litigation.

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There are some constitutional challenges to it.

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It does not, it has not stopped the roll out to the majority of entities.

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So please, even if you see if you're aware of this and this is on your radar or you go away and do some research, you will see that there are there are court cases being decided about the validity and the constitutionality of this particular legislation.

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But so far as of August of 2024, this is not impacting the majority of entity owners and reporting companies.

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So please just bear that in mind.

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And you know, we are going to advise clients on the existence of of the CTA and we're always going to be making sure that we have given you that good information.

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And we're always going to be referring you to legacy law if you have any questions about what you need to do and what your obligations are.

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So that is myself, Siobhan Keneally.

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I'm the latest state planning attorney, Angela Rudo, who is our asset alignment advisor and the partner of the law firm, Neil Shaw.

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So if you have any questions, please do feel free to reach out to your advisor, reach out to us and we'll certainly be able to help.

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Bye now.