New Reporting Requirements Impact on Professional Gamblers
Beginning in 2024, entities that are formed or registered to do business in the U.S. must comply with the Corporate Transparency Act (CTA). The CTA requires non-exempt entities to file a beneficial ownership information (BOI) report with the Financial Crimes and Enforcement Network (FinCEN). The BOI report discloses any owner that exercises substantial control or owns 25% or more of the entity.
Compliance Timeline
If your entity was formed prior to January 1, 2024, you must file your initial BOI report before January 1, 2025.
If your entity is formed after January 1, 2024, you must file your initial BOI report within 90 days of formation.
No additional disclosure is needed on an ongoing basis. However, if there is a change to the ownership structure of the entity, an additional report must be filed within 30 days of the change.
Who is required to file?
Any entity that is registered to do business in the U.S. by filing the appropriate documentation with a Secretary of State (unless exempt). This includes:
LLCs (both single-member and multi-member)
LLPs
Corporations (both S-Corporations and C-Corporations)
Exemptions are available for a number of entities, including “large operating companies”, nonprofits, public companies and certain financial institutions. FinCEN has released a detailed CTA guideline, which includes a list of exempt entities.
What is the penalty for noncompliance?
For those of you familiar with FBARs, FinCEN penalties are quite serious. If you report false or incomplete information, you may be subject to penalties up to $10,000 and two years in jail.
What does this mean for professional gamblers?
If you are a professional gambler, operating as a sole proprietor, without a legal entity (LLC or corporation), you do not have a filing requirement. The CTA reporting requirement does not apply to sole proprietors without legal entities.
If you are the owner of an LLC or corporation, or a partner in an LLC with more than 25% ownership interest, you must comply with BOI reporting per the outlined compliance timeline. It is important to review your formation documents, or schedule a meeting with your legal and tax professionals, to determine if you meet the reporting requirement.
What’s next?
The CTA requirements are currently enforceable as of January 1, 2024. However, guidance on how to file BOI reports has not yet been released. It is always possible this requirement is delayed. For now, it is best to adhere to the released compliance timeline to ensure you are not subject to any penalties for noncompliance.
I will make sure to include updates if final guidance is released prior to year-end.