ORLANDO – If you have a business entity as part of your real estate practice (or otherwise), you should familiarize yourself with a new federal reporting requirement.
Many corporations, limited liability companies and other entities that are formed and registered in the United States are now required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). FinCEN will maintain this information in a nonpublic database that law enforcement agencies, national security agencies and financial institutions can access. These rules are intended to prevent financial crimes like money laundering and terrorist financing and are part of the Corporate Transparency Act.
This brief article is designed to introduce the registration requirements. It is not a comprehensive overview. Follow the links below for detailed information published by FinCEN. If the resources below don’t answer your questions, consult your attorney. If you have general questions that don’t require knowledge of your specific entity, call the Florida Realtors legal hotline at (407) 438-1409.
Most business entities conducting real estate activity in Florida likely must comply with this reporting requirement. This includes corporations, LLCs and partnerships registered as brokerage firms. It also includes associate entities, which may be a PA, LLC or PLLC. Here are some introductory Q&As.
Q: Where can I find more information?
A: Here are a few links to FinCEN resources:
This link includes further links to a brochure, FAQs, and a video overview: https://www.fincen.gov/boi/small-business-resources
This 50-page Small Entity Compliance Guide is a helpful overview with plenty of detail: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf.
This is where to go to file a report: https://boiefiling.fincen.gov.
Q: What’s the deadline to register?
A: There are three different deadlines depending on when the business entity was formed:
If a reporting company was created or registered to do business in the United States before January 1, 2024, then the report is due by January 1, 2025.
If the reporting company was created or registered to do business on or after January 1, 2024 (but before January 1, 2025), then it has 90 calendar days after receiving notice that the company’s creation or registration is effective to file a report.
If the reporting company is created or registered on or after January 1, 2025, then it will have 30 calendar days after receiving notice that the company’s creation or registration is effective to file a report.
Note that if any changes are made to the reporting company’s required information after the initial filing is made, the company has 30 calendar days after the change occurs to file an updated report.
Q: If I registered my business entity with the Florida Secretary of State, do I also have to register with FinCEN?
A: Yes, this is a separate reporting requirement.
Q: FinCEN requires a reporting company to list “beneficial owners.” What is a beneficial owner?
A: A beneficial owner is any individual who directly or indirectly exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests of a reporting company. Please note this is merely the introductory definition; if you review the Small Entity Compliance Guide above, you will find pages of additional information to help you identify who the beneficial owner(s) might be for your entity.
Q: Is there a fee to file this report?
A: No. There is no fee for reporting beneficial ownership information to FinCEN.
Q: Are any entities exempt from this registration requirement?
A: Yes, please see the list of exemptions in the chart.
Note: On March 1, 2024, a federal court ruled the Corporate Transparency Actunconstitutional on grounds congress exceeded its constitutional power. However, this ruling only applies to the plaintiffs in that specific lawsuit for now, and FinCEN is appealing the case. The takeaway for members is that the reporting requirement could go away in the future, depending on how the case progresses. Florida Realtors ran an article on the case shortly after it was issued.
Joel Maxson is Associate General Counsel
Note: Information deemed accurate on date of publication
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Topics: Legal News
