If you own a business entity in Michigan including a Limited Liability Company or other entities formed via the Michigan Secretary of State’s office, there is a key new mandatory filing that you must comply with. It is called the Beneficial Ownership Report and it is part of The Corporate Transparency Act (CTA), which went into effect at the beginning of the year and is separate from any tax filings.
Please review the summary below and contact us for assistance to ensure you do not face fines or penalties for late or non-filing status.
Frequently Asked Questions About the Corporate Transparency Act Filing for Michigan Businesses
What is the CTA and When Did It Become Law?
The CTA is effective Jan. 1, 2024. It applies to you if you have a corporation, S-Corp, LLC, or any other entity created by paperwork filed with a Secretary of State office.
These requirements are not tax-related and are treated as a separate requirement by law.
What Does the CTA Mandate for Michigan Business Owners?
The CTA applies to virtually all businesses in the United States including those in Michigan. Specifically, for the CTA to apply to a business it must:
- Be incorporated or formed in the United States.
- Exceed or meet the criteria outlined by FinCEN regarding ownership and control.
Any existing business entities you may have prior to January 1, 2024, will have until January 1, 2025, to comply with the CTA.
What Other Takeaways of the CTA Should Michigan Business Owners Be Aware Of?
These are some of the other key takeaways you need to understand about the compliance requirements of the CTA as of Jan. 1, 2024:
- You must comply with the CTA’s Beneficial Ownership Information Reporting Rule (Reporting Rule) and add your information to a federal database. The purpose is to help FinCen (the U.S. Treasury Department’s financial crimes unit) monitor the activities of businesses more closely to reduce related crimes.
- The Reporting Rule is separate from tax return filings with significant penalties for non-compliance.
- This first-of-its-kind database will be maintained by the Financial Crimes Enforcement Network (“FinCen”) which is a part of the Department of Treasury.
- The database maintained by FinCen will not be publicly accessible, but it will be available to U.S. and international law enforcement agencies.
If you create a new business entity after January 1, 2024 you have 90 days from the date of formation to provide the required information to FinCen and submit any changes to the beneficial owners within 30 days of the change.
What Changes to Beneficial Owners Must Businesses Report?
Reporting companies are required to submit accurate and up-to-date beneficial ownership information to FinCEN. This information includes details about individuals who directly or indirectly own or control a significant portion of the company. Key elements to be reported include:
- Full legal name, date of birth, and residential or business address of each beneficial owner.
- A unique identification number from an acceptable identification document (e.g., driver’s license or passport) for each beneficial owner.
If you have any questions about this new filing please contact us. Please ask in advance about fees in regard to the CTA as these services will include an additional fee and the services are not part of any tax-related engagements.
