Corporate Transparency and Real Estate
NEW FEDERAL LLC AND CORPORATION REPORTING REQUIREMENT FOR 2021 AND BEYOND
by Clint Coons, a Think Realty Resident Expert
WHAT IS REQUIRED You must disclose the identity of any beneficial owner who directly or indirectly, through any contract, arrange - ment, understanding, relationship, or otherwise holds a 25 percent or greater ownership interest in the reporting company; or the identity of any person who exercises substantial control over the reporting company Disclosure is met by providing FINCEN acceptable iden - tification which is either a passport, driver’s license or other state issued identification.
ou might be wondering what the National Defense Authorization Act has to do with real estate investing
in 2021 and beyond. The answer is more than you might know if you have not been paying attention to inclusion of the “Corporate Transparency Act” (the ACT) in the Defense Act. The ACT’s aim is to prevent illegal activi - ties from being conducted through anonymous business entities by requiring the reporting of the identity of the “beneficial owners” of companies. Any LLC, Corporation or any other entity that is created by filing a document with a secretary of state e.g., article of organization etc.., is considered a “reporting company” under the ACT. A reporting company is now required to disclose the beneficial owners of the company to Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). In other words, if you have set up an LLC to hold your investment real estate the federal government is requiring you to disclose your ownership via annual filing.
FAILURE TO DISCLOSE If you fail to meet the disclosure requirements the trea - sury can fine you up to $10,0000 and or imprisonment of up to two years.
28 | think realty magazine :: march 2021
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