If you own or manage a business entity, please be aware of a new federal reporting requirement under the Corporate Transparency Act (CTA), effective January 1, 2024.
The CTA requires many U.S. business entities to report Beneficial Ownership Information (“BOI”) to the Financial Crimes Enforcement Network (“FinCEN”). BOI includes specific details about the individuals who own or control the company. This information will be used by federal and state law enforcement agencies to prevent money laundering. The reported information will not be available to the public.
Impacted Entities
The CTA’s reporting requirements apply to many types of entities, typically including any entity that has filed documents to create or register within a state or similar office. The reporting requirement applies whether the entity is an active business or exists solely to hold real estate or other assets.
Key Filing Deadlines:
- Entities created before January 1, 2024, must file the BOI report with FinCEN by January 1, 2025.
- Entities created during 2024 must file within 90 days of their creation.
- Entities created on or after January 1, 2025, must file within 30 days of their creation.
Exemptions:
The CTA provides exemptions for many types of business entities. Please follow the link at the bottom for more information on exemptions or consult with your attorney or accounting professional to determine if you have a reporting requirement.
Who Is Considered a Beneficial Owner?
A Beneficial Owner is any individual who, directly or indirectly, exercises “substantial control” over a reporting company or owns at least 25 percent of it. Companies created or registered after January 1, 2024, must also report information about their company applicants, i.e., the person filing the creation or registration documents.
If there are changes in the company or BOI after the initial report, an updated BOI report must be filed within 30 days of the change. This includes changes in Beneficial Owners or changes to a Beneficial Owner’s name or address.
Penalties for Non-Compliance
There are substantial penalties for non-compliance. If you think the CTA might impact your entity speak with your attorney to determine your reporting requirements.
You can find a list of entity exemptions and more information at the following FinCEN link, https://www.fincen.gov/boi-faqs.
