What to know about The Corporate Transparency ACT

The Corporate Transparency Act (CTA) that went into effect on January 1, 2024, requires many business entities to file a Beneficial Ownership Information Report (BOIR) with the U.S. Financial Crimes Enforcement Network (FinCEN). We have been advised by accounting governing bodies that we should not be filing this form on our clients’ behalf so if you need assistance filing, please contact your attorney. However, we believe that most clients will be able to complete this filing without assistance.

Compliance with the CTA should not be difficult; however, compliance is critical as the prescribed penalties are extremely punitive. Penalties include civil penalties of up to $500 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 BOIR may be held accountable for that failure.

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Purpose of the CTA:

The CTA was established to prevent individuals with malicious intent from hiding or benefitting from the ownership of U.S. entities to facilitate illegal operations anonymously.

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Who is Impacted:

The majority of corporations, LLCs, and other entities formed in the U.S. and foreign entities registered to do business in the U.S. Essentially, any legal business entity not included in the?BOIR Filing Exemptions?listed below is required to file.?

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When is it Due:

• For all entities that existed before January 1, 2024, this information is due to FinCEN by January 1, 2025.
• For entities created during 2024, entities have 90 days from inception to file.
• For entities created during 2025 and beyond, entities have 30 days from inception to file.

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Where to File:?

All non-exempt entities must file electronically with FinCEN. Access the form by going to FinCEN’s BOI E-Filing website (https://boiefiling.fincen.gov) and selecting “File BOIR.”

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What if the Information Changes:

If there is any change to the required information about your company or its beneficial owners that has been filed, your company must file an Updated BOIR?no later than 30 days after the change occurs.

The following are some examples of changes that would require an updated BOIR:?

• Any change to the information reported for the reporting company, such as registering a new DBA.
• A change in beneficial owners, such as a new CEO, a sale that changes who meets the ownership interest threshold of 25%, or the death of a beneficial owner. (Note: When an owner dies, report those changes within 30 days of when the owner’s estate is settled.).
• Any change to a beneficial owner’s name, address, or unique identifying number provided in a BOIR.

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?Background Info:

https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf

https://www.fincen.gov/boi-faqs

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BOIR Filing Exemptions:

The following table summarizes the 23 types of entities not required to file a BOIR:

* The exemption for Large Operating Companies (#21) requires that you have:

1) more than 20 full-time employees employed in the U.S.;

2) have a physical office within the U.S.; and

3) 2023 taxable gross receipts, from U.S. sources, over $5 million