New Beneficial Ownership Information Reporting Requirements Under the Corporate Transparency Act

If you are already one of our corporate clients, you received the information we have laid out in this article recently. As a firm, we want to assist anyone who may need to know about the new Beneficial Ownership Information reporting requirements. 

As of January 1, 2024, all business entities formed or registered to do business in the U.S. are required under the Corporate Transparency Act (“CTA”) to file beneficial ownership information (“BOI”) reports with the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Both corporate entities and individuals can be held liable, and those who violate this may face civil or criminal penalties. To avoid costly mistakes, it is crucial to familiarize yourself with these new requirements. 

Reporting companies must submit information pertaining to the business entity itself, as well as its beneficial owners. A beneficial owner is one who directly or indirectly exercises substantial control over the reporting company, has a leadership role or decision-making authority, or one who owns or controls at least 25% of the ownership interests in the company. Additionally, reporting companies created/registered on or after January 1, 2024, must report their company applicants. That being, the individual responsible for the filing of formation documents. 

A reporting company formed prior to January 1, 2024, will have until January 1, 2025, to file initial BOI Reports with FinCEN. Those formed on or after January 1, 2024, will have 90 days from receiving notice that their formation is effective to file. Lastly, those formed after January 1, 2025, must file within 30 days. 

The willful submission of false or incomplete information or neglecting to update reported information may result in fines up to $10,000. Individuals may also be subject to criminal penalties up to two years imprisonment.

 

Now allow us to summarize all of that and list each bit of pertinent information succinctly:

The Corporate Transparency Act (CTA) introduced new reporting requirements for beneficial owners of business entities in the United States, effective January 1, 2024. Under the CTA, reporting companies must file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN).

 

Key Aspects of Beneficial Ownership Reporting

Definition of Beneficial Owner

A beneficial owner is defined as an individual who:

1. Exercises substantial control over the reporting company
2. Owns or controls at least 25% of the company’s ownership interests

Reporting Requirements

Reporting companies must provide the following information for each beneficial owner:

– Name
– Date of birth
– Address
– Identifying number from a government-issued document

Deadlines for Compliance

– Existing companies (formed before January 1, 2024): Must file by January 1, 2025
– Companies formed in 2024: 90 days after receiving notice of formation
– Companies formed after January 1, 2025: 30 days after formation

 

Implications and Considerations

Exemptions

The CTA provides 23 categories of exempt entities, including public companies, banks, and large operating companies.

Penalties for Non-Compliance

Violations of CTA reporting obligations can result in:

– Civil and criminal penalties

– Fines up to $10,000

– Imprisonment for up to two years

Ongoing Compliance

Reporting companies must update their BOI reports within 30 days of any changes to the reported information.

By understanding and complying with these new beneficial ownership reporting requirements, businesses can avoid costly penalties and contribute to the CTA’s goal of combating financial crimes. For a deeper analysis of whether your company qualifies under an exemption, or if you have any questions or concerns, you may contact our office and we will refer your questions to Jared Trent, attorney with Chiumento Law. He is also available for consultations and to provide assistance in ensuring filing compliance with the CTA. We look forward to working with you, as we want you to remember that we are here for you when life happens.