On January 1, 2024, a new Federal Law, the Corporate Transparency Act (CTA), went into effect mandating the filing of a Beneficial Ownership Information (BOI) Report for most existing and newly formed entities (corporations and limited liability companies). The new law requires reporting of all of the information of a company’s “Beneficial Owners” with the U.S. Department of Treasury’s Financial Crimes Enforcement Network, also known as FinCEN.

The stated objective of the CTA is to establish uniform reporting requirements for businesses to combat tax fraud, money laundering, terrorism financing and similar illicit activities.

Companies That Need to Report:

·     Domestic Reporting Companies: Corporations (both S and C Corps), Limited Liability Companies (LLCs) and any other entities registered in any state in the U.S.

·       Foreign Reporting Companies: Entities formed within and under the laws of a foreign country which also registered to do business in the U.S. by the filing of a document with a secretary of state or any similar State or Tribal office in the U.S.

·       The reporting requirements are applicable to most businesses which (i) annually earn less than $5 million in gross receipts as reported on its last federal income tax return, (ii) have fewer than 21 full time employees in the United States, or (iii) do not have a physical office or other location for its operations in the United States.

·       Entities that are not created by the filing of a document with a Secretary of State or similar state office are not required to file a BOI Report, such as Sole Proprietors and General Partnerships.

Why scour through 100’s of pages of FinCEN regulations, when we have done the work for you? We are CTA compliance and beneficial owner experts.

Penalties for non-compliance are steep and determination of “Beneficial Ownership” can be complicated. For some companies, depending on the circumstances, “Beneficial Ownership” may include non-owner senior officers, trustees, owners of a parent company or even a spouse or adult child.

We have compliance and filing plans to assist all types of company structures, from simple to the most complex. You pay for only the level of services your company requires.

Willful noncompliance with the requirements of the CTA can result in a civil fine of up to $500 per day, up to a maximum of $10,000, and potentially criminal penalties.

Click on the Exemption Checker on our menu above to see a list of exemptions and to determine if your company is an exempt entity.

No, but you may want to check with your lawyer to be sure your entity qualifies as an “Inactive Company” under the CTA.

To be eligible for an Inactive Entity exemption a company must meet all of the following conditions:

The company is not engaged in an active business.

The company was registered before January 1, 2020. If registered on or after this date, the entity must file a BOI Report regardless of activity.

The company is not owned by a foreign person, a person who is not a U.S. Citizen or a person who is not a U.S. Resident.

The company is not owned by a partnership, corporation, estate or trust.

The company has not experienced any change of ownership in the preceding 12-month period.

In the preceding 12-month period the company has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account that the entity had an interest in.

The company does not hold any assets, whether in the U.S. or abroad, including any ownership in any corporation, LLC or similar entity.

Companies formed before 1/1/2024 must file their BOI Report by 1/1/2025.

Companies formed on or after 1/1/2024 must file their BOI Report within 90 days after their formation date.

Updated reports are required to be filed no later than 30 days after the date of of any change to any of the information previously reported.

Changes requiring a new report to be filed include:

1. A change in the beneficial owners of a company.

2. A change in a beneficial owner’s name, address or unique identifying number (i.e Drivers License).

3. A change in circumstances that causes a company to become exempt from filing a BOI Report.

4. If a Report was filed with inaccurate information, a company must file a corrected report no later than 30 days after the date the company becomes aware of the inaccuracy.

·      

Legal name of the company.

DBA/trade names used by the company.

Current street address of the principal place of business of the company in the U.S.

State or jurisdiction of formation or registration, in the case of a foreign company.

Taxpayer ID number (EIN) of the company.

Reporting companies are required to provide the following information for each Beneficial Owner:

Name

Date of birth

Residence address (which cannot be a PO box)

Identifying Number of an acceptable government-issued ID, such as a Driver’s License, and if none is available, a Passport, and the name of the issuing state or jurisdiction

Image of an acceptable government-issued ID

In some cases determination of beneficial ownership can be complicated. For example, you may need assistance in determining beneficial ownership if your company is owned by a trust, an estate or a parent company. Employees or others with profit sharing arrangements or voting rights could also be required to be included in the report as a beneficial owner.

An individual is a Beneficial Owner if they either:

(i) own or control 25% or more of the Company’s ownership (calculated on a fully diluted basis, with any options or convertible securities being treated as exercised), or

(ii) exercise substantial control over the Company.

Ownership Interests

Individuals that own or control at least 25% of the Company’s ownership interests, including shares of stock, membership interests, voting rights, profit rights or any other mechanism used to establish ownership.

Substantial Control

NOTE: Since the definition of “substantial control” is a facts and circumstances test, reporting companies should consider any facts and circumstances that might bear on substantial control, including family relationships among beneficial owners, voting rights, employment agreements and other arrangements.

Under the CTA, an individual is considered to have “substantial control” of a reporting company if they fall within any of the 4 categories below:

1. They are a senior officer (such as a President, CEO, Manager, COO, General Counsel, etc).

2. They have the authority to appoint or remove officers or directors.

3. They are an important decision-maker in connection with the company’s nature, scope, product offering, geographies, finances, sale of assets, compensation structure, amendments to governance documents, major expenditures or investments, issuance of any equity, incurrence of any significant debt, or approval of the operating budget of the reporting company, etc.

4. They are an individual with any other form of substantial control over a reporting company.

BOI information will not be publicly searchable.

However, the following may access the information upon request:

Federal, State, Local and Tribal officials who submit a request through a US Federal government agency, will be able to obtain BOI reports for authorized activities.

Financial institution regulators will have access to BOI Reports when they are assessing a financial institution’s compliance with CDD requirements.

Financial institutions will be able to request and receive BOI, however, only with the consent of the reporting company, and these requests will be required to be specific to an individual reporting company; they will not be able to make open-ended queries.