What is the Corporate Transparency Act (CTA) and how does it affect LLC Beneficial Ownership reporting requirements?

Created April 02, 2024 20:21

Customers who bought a checkbook IRA from Rocket Dollar before January 1st, 2024, have a Colorado LLC inside of their checkbook IRA. Checkbook IRAs with Trusts are not subject to the same reporting requirements.

The Corporate Transparency Act of 2019 was enacted as a result of the Anti-Money Laundering Act of 2020, designed to counter money laundering, crime, corruption, and lawyering of entities where a corporation could hide its beneficial owners.

FinCEN, the Financial Crimes Enforcement Network, is the government body to which beneficial ownership information must be reported.

All Rocket Dollar customers will have to register their Colorado LLCs (or other LLCs they may have created on their own). Trusts have an exemption from these reporting requirements.

What do I have to do for my Colorado LLC?

LLC Managers must file on behalf of their IRA LLC. All LLCs created prior to 1/1/2024 will have until 1/1/2025 to file the BOI reporting. Rocket Dollar will NOT complete this filing, and it must be filed by the Individual IRA holder. You will file by completing a Beneficial Ownership Information Report (BOIR) through this link to FinCEN’s BOI Filing System (Beneficial Ownership Information).

"A domestic reporting company created before January 1, 2024, must file its initial BOI report not later than January 1, 2025." "A final rule implementing the beneficial ownership information reporting requirements of the Corporate Transparency Act (CTA) was issued in September 2022. These regulations go into effect on January 1, 2024. Beneficial ownership information will not be accepted prior to January 1, 2024."

How long do I have to do this?

You have until January 1st, 2025. It is strongly recommended to do the report ASAP to get it completed. Rocket Dollar is always very busy at the turn of the year and will prioritize other questions of clients during times of high end-of-year volume.

What is a “Beneficial Owner?”

A beneficial owner is a person who enjoys the benefits of ownership even though the title to some form of property is in another name. It also means any individual or group of individuals who, either directly or indirectly, has the power to vote or influence the transaction decisions regarding a specific security.

A beneficial owner is a person who enjoys the benefits of ownership though the property's title is in another name. Beneficial ownership is distinguished from legal ownership, though in most cases, the legal and beneficial owners are one and the same.

Are there exemptions that I could use to avoid filing this report?

Unfortunately, no. FinCEN lists 23 exemptions, including one that mentions tax-exempt entities. On a close read of the FinCEN guidelines, tax-exempt entities refer to 501(c)(3)s.

You can see their checklist below. IRA LLC managers would not appear to be exempt, and a Colorado LLC would not appear to be exempt. If you refuse to file a report, you are liable for possible civil penalties:

$500 per day.
$10,000 fine for reporting false or inaccurate information.
2-year prison sentence.

FinCEN’s “Tax Exempt Entities Exemptions” Checklist Instructions

Instructions for Filing. FINCEN may update their application at any time. Make sure you can continue all the way to the end to complete your application. If you are unsure, strive to finish the application and make sure it is submitted rather than stopping.

Go to this link, the electronic filing section. https://boiefiling.FinCEN.gov/boir/html If you wish to file by Adobe Reader and PDF, you must generate your own instructions.
Login to App.rocketdollar.com > PROFILE> Documents > USER DOCUMENTS> Download your documents to reference in the upcoming questions.
1. IRA LLC Articles of Organization
2. EIN Letter
3. Operating Agreement
YES to a FinCEN ID, to assist with modifications or referring to the filing in the future.
Ignore, do NOT check Foreign Pooled Investment Vehicle.
List the name of your LLC on your articles of organization.
List any DBA if you have changed the name of your LLC (unlikely for Rocket Dollar customers).
EIN
Refer to your EIN letter document. DO NOT LIST YOUR SOCIAL SECURITY NUMBER HERE.
Ignore and skip, this is only for foreign tax IDs.
United States of America
1. State of Formation - Colorado
2. SKIP - Tribal Jurisdiction of Formation
3. SKIP
Current Address - where you live. Rocket Dollar does not provide another address.
City
United States of America.
Your Home State.
Your Zip Code.
Existing Reporting Company - Some customers have reported issues with this question. Do not check the box as it will not let you continue in part 2. Almost all customers created their LLC before Jan 1 2024, but have not completed FINCEN requirements. Make sure you can continue to complete your application. Do not "Freeze" or stop working on your application, as it is essential to get it completed before Jan 1 2025.
SKIP
FinCEN ID - provide if you already have a FinCEN ID. If a FinCEN ID for the company applicant is not provided, information about the company applicant must be provided in fields 19 through 33.
Last Name of whoever is filling out this online report. This will probably be you, the client, but could be a financial advisor, assistant etc.
Your First Name.
Your Middle Name.
Your Suffix if your name has one (for example Jr, Sr, I, II, IV,)
Your Date of Birth
Address Type - Residential Address (You address)
Your Residential Address
Your City
Your Country/Jurisdiction
Your State.
Your Zip Code.
Your Chosen Identify Document to Provide (drivers license or passport, your choice)
Drivers License Number or Passport Number
Identifying document issuing jurisdiction - fill out as it applies to your identity document.
Provide a picture of your ID by uploading it to the portal
SKIP
Only check this if you are a parent filling out this for a child with a checkbook IRA with Colorado LLC.
This is a FinCEN ID just for the client, the Beneficial Owner of the account.
As Described earlier, you do not have an exempt entity through a Rocket Dollar Coloardo LLC.
Last Name: Must be the client’s and IRA holder’s last name. Not allowed to put a financial advisor or another persons name other than the client. The IRA holder is always the beneficial owner of the LLC.
Your First Name.
Your Middle Name.
Your Suffix if your name has one (for example Jr, Sr, I, II, IV,)
Your Date of Birth.
Your Address.
Your City.
Your County/Jurisdiction
Your State.
Your Zip Code.
Your Chosen Identify Document to Provide (drivers license or passport, your choice).
1. Identifying Document Number
2. Jurisdiction of your Identity Document (typically the United States)
Identity Document Number
State of Identity Document
Upload a Picture of your identity Document.

Scam and Fake FINCEN Phishing Scams.

Many scam organizations will fake sending documents to your official LLC address by scanning public records, and try and imitate an official state or federal government entity. Check these letters carefully, and if they are asking for payment, it is best to pause, read all fine print, and probably throw them away and ignore them. They hope to gather payment from you quickly before you realize they are not a government entity and that filing is of no cost to you.

"FinCEN does NOT send correspondence requesting payment to file BOI. Do not send money in response to any mailing that claims to be from FinCEN or another government agency. Correspondence that asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent."

3:46

https://fincen.gov/beneficial-ownership-information-reporting#:~:text=FinCEN%20does%20NOT%20send%20correspondence,mails%20or%20letters%20are%20fraudulent.

I've already completed this... can Rocket Dollar stop bothering me about it?

You can input your name and email here and Rocket Dollar will take you off the next compliance warning emails. Email reminders will be going out between now and the end of the year.