What is the Corporate Transparency Act (“CTA”)?
Starting January 1, 2024 each reporting company shall submit to FinCEN a report that identifies each beneficial owner of the applicable reporting company and each applicant with respect to that company. Existing companies have until January 1, 2025 to file its initial beneficial ownership information (“BOI”) report or 30 days for new reporting companies .If there is any change to the required information about your company or its beneficial owners in a BOI report that your company filed, your company must file an updated report no later than 30 days after the date of the change.
Definitions:
Reporting Company – A corporation, limited liability company (LLC), or other “similar entity”
Exemptions are available for these companies
Large Operating Company
- Employs > 20 full-time employees in the U.S.
- Filed a Federal tax return in the previous year with more than $5M in gross receipts or sales
- Has an operating presence at a physical office in the U.S.
Beneficial Owner – An individual who, directly or indirectly:
- Exercises substantial control over the entity; or
- Owns or controls at least 25% of the ownership interests of the entity
What is required to be reported?
The full legal name of the reporting company and any DBA names
Domestic reporting company:
- Address of principal place of business
- State or Tribal jurisdiction of formation
- IRS TIN (e.g., EIN)
Foreign reporting company:
- Address of primary location in the US
- State or Tribal jurisdiction where first registered in the US
- IRS TIN, or if no TIN then foreign tax ID number and taxing jurisdiction
Beneficial Owners
- Full legal name
- Date of birth
- Residential street address
- A unique identifying number from one of the following:
- A non-expired U.S. passport
- A non-expired U.S. identification document
- A non-expired U.S. driver’s license
- A non-expired foreign passport (only if no other documents)
- Image of document from which number was obtained
Penalties for not filing
Willfully providing, or attempting to provide, false or fraudulent information to FinCEN (directly or indirectly) or failing to report complete or updated information to FinCEN
Penalties:
- Shall pay a civil penalty of up to $500 per day that the violation continues or has not been remedied; and
- May be fined up to $10,000, imprisoned for up to 2 years, or both
How We Can Help
The American Institute of Certified Public Accountants (“AICPA”) has determined that the BOI report is considered practice of law. We are able to assist clients on the initial BOI report, however, we will not be responsible for monitoring changes subsequent to the initial filing. Clients will have to update their report after the initial filing.
Additional Information and Resources:
Please note, the write-up above is a high-level summary and should not be taken as definitive guidance. All clients should use the additional resources below for more information. In addition, the write-up is current as of the published date unless otherwise noted.
BOI Frequently Asked Questions – https://www.fincen.gov/boi-faqs
Compliance Guide – https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf
Where to File – https://www.fincen.gov/boi