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Corporate Transparency Act: Beneficial Ownership Information Filing Requirements

The Corporate Transparency Act (CTA) was enacted in 2021 and became effective on January 1, 2024. The CTA is designed to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illicit activities. It requires certain companies to report their beneficial ownership information (BOI) and applies to entities created by the filing of a document with the secretary of state or a similar office or formed under the laws of a foreign country and registered to do business in the United States. The act aims to prevent individuals with malicious intent from hiding or benefiting from illegal operations.

The small entity compliance requirements under the CTA involves filing a BOI report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Corporations, limited liability companies, limited partnerships, and other similar entities formed or registered to do business in the United States are required to disclose information about their beneficial owners unless they qualify for an exemption. A beneficial owner is any individual who, directly or indirectly, exercises substantial control over the entity or owns or controls 25% or more of the entity’s ownership.

Non-compliance with the CTA can result in significant penalties, including steep civil fines. Reporting companies that fail to report or provide inaccurate beneficial ownership information may be subject to penalties of up to $10,000 and imprisonment for up to two years. It is essential for businesses to ensure compliance with the CTA to avoid severe consequences.

Reporting companies created or registered to do business before January 1, 2024, have until January 1, 2025, to file their initial BOI report. Reporting companies created or registered after January 1, 2024, and before January 1, 2025, have 90 calendar days after receiving actual or public notice that the company’s creation or registration is effective to file their initial BOI report.

Additional information about the Reporting Rule and guidance materials are available at www.fincen.gov/boi.

We at the Law Office of Joan K. Fine, PLC, would be pleased to assist you with the completion and filing of the BOI. Please do not hesitate to reach out if you have any questions.