The Corporate Transparency Act (CTA) was enacted to help with U.S. anti-money laundering laws. Under the CTA, your business entities may be required to e-file a Beneficial Ownership Information Report (BOIR) with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) and that report will contain personal identifying information about the business entity’s “beneficial owners” and “company applicants.”

Beneficial Owners

The term “beneficial owner” includes individuals who:

(1) exercises substantial control over the business entity;
(2) are certain executive or C-suite level officers;
(3) or owns or controls at least 25% of the ownership interests of the business entity.

The CTA rules provide that substantial control over the business entity includes the (i) authority over the appointment or removal of any senior officer or dominant majority of a board or similar body of such business entity, or (ii) direction, determination, or decision of, or substantial influence over, important decisions made by such business entity. In short, the purpose of the BOIR is to inform FinCEN of the individuals who own, form or have substantial control over various business entities.

Deadlines for Filing BOIR

If the CTA applies to any of your business entities, the deadlines for filing the BOIR are as follows:

• If a business entity was formed prior to January 1, 2024, the deadline for filing a BOIR with FinCEN is January 1, 2025.
• A new business entity formed during the period starting January 1, 2024 and ending December 31, 2024 will be required to file a BOIR no later than 90 days following the date of formation of such entity.
• A new business entity formed after December 31, 2024 will be required to file a BOIR no later than 30 days after date of formation of such entity.
• In addition, if a business entity is required to file a BOIR, the business entity also will be required to file a BOIR from time to time to report any new or changed beneficial owner information no later than 30 days following the date of such change in beneficial ownership information. Therefore, this requirement imposes on the business entity the obligation to monitor reportable changes in beneficial ownership information.

Penalties

Failure to file the required BOIR on or prior to the applicable deadline could result in both civil and criminal penalties. The civil penalty is $591/day.

Additional Information and Suggested Next Steps

We alert you to the new filing requirements under the CTA but this email is not intended to provide you comprehensive information about the CTA and BOIR filing requirements.

1. More information about the reporting requirements can be found here (https://www.fincen.gov/boi). You should review the reporting requirements to determine if they apply to your entities. For small entities, FinCEN has published a tailored compliance guide that can be accessed here. General FAQs are available here.
2. The BOIR form may be completed and filed electronically at this website.
3. If your entity is subject to reporting, you should start gathering the personal identifying information of each individual who is considered a “beneficial owner” (someone who owns 25% or has substantial control over the business entity). You may want to alert each “beneficial owner” that they can either provide their identifying information or their FinCEN Identification Number. Instructions on how to apply for a FinCEN Identification Number can be found here. Those individuals who do not want to provide their personal information may want to apply for a FinCEN Identification Number, which, if acquired, is the only information needed for reporting.
4. For those entities owned by trusts, the trust agreement should be carefully reviewed to determine which individuals need to be listed as a beneficial owner. Additional regulations may be issued later this year to provide further clarification on the treatment of different fiduciaries under trust agreements.

Your business entity is currently subject to various reporting and compliance requirements. We recommend that you reach out to the professional who currently oversees this work for assistance with CTA reporting. Please note that, given the high volume of clients who may need guidance on this topic, we will be charging for our time on an hourly basis to answer questions and review any documents. 

We are available to confirm whether your business entity is a “reporting company” subject to the CTA and to assist with identifying the beneficial owners. We may prepare and file the BOIR for you only on an agreed upon case by case basis. You can find out more about the CTA, reporting and exemptions by visiting our Corporate Transparency Act Resource Center.