Businesses now have specific reporting requirements starting in 2024 under the Corporate Transparency Act (CTA). This mandate, from the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), is intended to help prevent and combat money laundering activities by requiring some businesses to report their Beneficial Ownership Information (BOI).
There are a few factors used in determining a beneficial owner, including an individual who, indirectly or directly:
- Exercises substantial control over a reporting company
- Owns or controls 25% or more of a reporting company’s ownership interests
Businesses in existence before Jan. 1, 2024, must file by Jan. 1, 2025. As of Jan. 1, 2024, newly formed entities have 90 days from the date of receiving notice that the company’s creation or registration has become effective to file their BOI report. As of Jan. 1, 2025, all businesses required to report will have 30 days from establishment or registration to file.
The electronic filing system is available and the form to report BOI can be accessed online through FinCEN’s website: www.fincen.gov/boi.
Companies that need to file the BOI Report:
- a corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
- a foreign company that was registered to do business in any U.S. state or Indian tribe by such a filing.
For more information about whether a company needs to file, visit fincen.gov/boi.
A reporting company must report:
- Legal name
- Any trade names, DBAs, or trading as names
- Current street address of its principal place of business
- Its jurisdiction of formation or registration
- Taxpayer ID#
Beneficial owners must report:
- Individual’s name
- Date of birth
- Residential address
- An ID# from an acceptable ID document (passport, U.S. driver’s license, and name of issuing state or jurisdiction of the ID document
- Must supply an image of the ID document and it cannot be expired
Filing is simple, secure, and free of charge. Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in civil or criminal penalties, including civil penalties of up to $591 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.
For companies with simple ownership structures, filing may take less than 20 minutes. Unless a company needs to update or correct information, it is a one-time filing requirement.
The CTA allows for the following groups to access beneficial ownership information:
- Federal, State, local, and Tribal officials, as well as certain foreign officials who submit a request through a U.S. Federal government agency, for authorized activities related to national security, intelligence, and law enforcement.
- financial institutions in certain circumstances, with the consent of the reporting company and
- those financial institutions’ regulators when they supervise the financial institutions
I filed the report for my law firm, and it was simple. Be smart, and don’t forget to file. Remember, an ounce of prevention is worth a pound of cure. If you have any questions, please do not hesitate to contact me.
