The Corporate Transparency Act is a law passed in 2021 requiring businesses to report information about their beneficial owners, the individuals who ultimately own or control them.  The purpose of the law is to prevent money laundering, tax fraud, and other illegal activities by making it harder for criminals to hide behind shell companies.  Although the law passed in 2021, it takes effect January 1, 2024, and will be enforced by the Financial Crimes Network (FinCEN), a bureau of the U. S. Department of the Treasury.

Companies required to report are called reporting companies.  According to the law, a reporting company is any corporation, limited liability company, or similar entity that is created or registered in the U.S., or that operates in the U.S. by filing a document with a state or tribal office.  Foreign businesses registered to do business in the United States will also have to file a report.  There are exceptions for companies that are already subject to federal or state regulation, such as publicly traded companies, banks, insurance companies, securities brokers, and government entities.

A beneficial owner is any individual who directly or indirectly owns 25% or more of the ownership interests of a reporting company, or who exercises substantial control over the reporting company.  A reporting company must provide the following information about each of its beneficial owners to FinCEN:  full legal name, date of birth, current address, and a unique identifying number from a valid identification document, such as a passport or driver’s license.

How to Report:  Reporting companies will have to report beneficial ownership information electronically through FinCEN’s website -  www.fincen.gov/boi

When to Report: 

·         If your business was created or registered prior to January 1, 2024, you have until January 1, 2025 to report the BOI

·         If your company is created or registered on or after January 1, 2024, you must report BOI within 90 days of notice of creation or registration.

·         Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.

FAILURE TO TIMELY AND ACCURATELY REPORT CAN RESULT IN UP TO TWO YEARS IN JAIL AND/OR FINES UP TO $500 PER DAY

IMPORTANT:  Assisting you with your compliance with the Corporate Transparency Act (“CTA”), including beneficial ownership information (“BOI”) reporting, is not within the scope of our engagement. You have sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. We shall have no liability resulting from your failure to comply with CTA. Information regarding the BOI reporting requirements can be found at https://www.fincen.gov/boi.