Corporate Transparency Act and Beneficial Ownership Information Reporting
In 2021, Congress enacted the Corporate Transparency Act (CTA). This law creates a beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
In late November 2023, the Financial Crimes Enforcement Network (FinCEN) enacted final regulations concerning the CTA and reporting of Beneficial Ownership Information (BOI).
The reporting requirements under the CTA became effective January 1, 2024. Entities formed prior to January 1, 2024, have until January 1, 2025, to prepare and file their initial reporting. For entities formed in 2024 the information must be provided within 90 days of the effective registration date of the newly formed entity. Entities formed in 2025 and beyond will have just 30 days to complete the required reporting. After the initial filing, all entities that are required to file will have just 30 days to report any changes to BOI.
Companies required to report are called reporting companies. Your company may be a reporting company if your company is a corporation (this includes C corporations and S corporations among others), a limited liability company, or was otherwise created in the United States by filing a document with the secretary of state or any similar office under the law of a state or Indian tribe or a foreign company and was registered to do business in any U.S. state or Indian tribe by such filing.
The reporting company is required to provide identifying information relative to the beneficial owners, which include those who own more than 25% of the entity being reported on and anyone who exercises “substantial control” over the business. The identifying information includes name, legal address, date of birth and requires providing a government issued identifying document (such as a driver’s license or a passport), which must be scanned and included with the filing.
We recommend that you contact your legal counsel to assist with the filing. We are happy to answer questions you might have but will not be preparing the filings for our clients. If you need a referral to someone who can prepare the filing for you, please feel free to reach out to us.
There are 23 exemptions to this requirement and those can be found in this Small Entity Compliance Guide https://www.fincen.gov/boi/small-entity-compliance-guide
Below are some links to the FinCEN website for you to learn more about this requirement. Failure to file may result in civil or criminal penalties that may be significant.
https://www.fincen.gov/boi we recommend you review the Brochure Introduction to BOI reporting on this page.
Here is a link to an 11 minute 43 second video prepared by the Department of the Treasury with Under Secretary Brian Nelson https://www.youtube.com/watch?v=4qXv37hf4Dw