Corporate Transparency Act (CTA)
In 2021, Congress enacted the bipartisan Corporate Transparency Act to curb illicit finance. This law requires many companies doing business in the United States to report information about who ultimately owns or controls them.
Effective January 1, 2024
Reports to: U.S. Department of the Treasury, Financial Crimes Enforcement Network (FinCEN)
A new reporting requirement effective this year, the Corporate Transparency Act will be required for most existing and new businesses. As a new business, I was required to file my Beneficial Ownership Information report within 90 days of formation. Although it has only been 30 days, I decided to get mine done well ahead of time to get some firsthand perspective on the process. It was an easy process for me. Dutiful Compliance Solutions LLC is a single member LLC and I am the only officer (the only employee at all). I registered for my FinCEN ID and then filed through the BOI E-Filing system.
I highly recommend using the FinCEN ID registration. When you are filing the BOI, you then only need to input the registration number you are given for each beneficial owner and saves a lot of time and effort.
Deciding who files the BOI is extremely important. The penalties for filing incorrectly are quite steep. If you are unsure if you can do it with 100% accuracy, don’t take a chance, get help. For more complex ownership or corporate structures, it is best to go with an attorney. I have heard that most CPA firms are not taking on these filings due to the liability that comes with filing them incorrectly.
For more information, the best source is the FinCEN’s BOI website itself. There are resources on the website to help you understand if you need to report, what information is required, and what needs to be reported. You can also register for your FinCEN ID and E-File your BOI.
Reporting Companies:
Any Entity set up by registering with Secretary of State, or similar office, under state law
Corporations
LLC
Foreign Entity
Exempt Companies:
Securities reporting issuer
Governmental authority
Bank
Credit union
Depository institution holding company
Money services business
Broker or dealer in securities
Securities exchange or clearing agency
Other Exchange Act registered entity
Investment company or investment adviser
Venture capital fund adviser
Insurance company
State-licensed insurance producer
Commodity Exchange Act registered entity
Accounting firm
Public utility
Financial market utility
Pooled investment vehicle
Tax-exempt entity
Entity assisting a tax-exempt entity
Large operating company
Subsidiary of certain exempt entities
Inactive entity
Who is a beneficial Owner?
The individual is a senior officer
The individual has authority to appoint or remove certain officers or a majority of directors of the reporting company
The individual is an important decision-maker
The individual has any other form of substantial control over the reporting company.
Owns or controls at least 25 percent of the ownership interests of a reporting company
When to report?
In existence before 2024 – before Januray 1, 2025
Set up in 2024 – within 90 days
Set up in 2025 – within 30 days
Updates and Corrections – within 30 days
Who can access BOI information?
FinCEN will permit Federal, State, local, and Tribal officials, as well as certain foreign officials who submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. Financial institutions will also have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the financial institutions. FinCEN is developing the rules that will govern access to and handling of beneficial ownership information. Beneficial ownership information reported to FinCEN will be stored in a secure, non-public database using rigorous information security methods and controls typically used in the Federal government to protect Non classified yet sensitive information systems at the highest security level. FinCEN will work closely with those authorized to access beneficial ownership information to ensure that they understand their roles and responsibilities to ensure that the reported information is used only for authorized purposes and handled in a way that protects its security and confidentiality.
Information Required for Reporting Companies:
Legal Name
Trademarks
Current US Address
TIN
Jurisdiction where formed or registered
Information Required for Individuals:
Names
Addresses
Birthdays
Identification Numbers
Copy of Identification on file
Jurisdiction of register
FinCEN ID
(not required)
An individual beneficial owner or company applicant's FinCEN ID can be reported instead of required information about that individual on the reporting company's Beneficial Ownership Information Report (BOIR) submitted to FinCEN.
Required Information:
Name
Address
ID Number
ID image
BOIR E-File
Filing Options:
PDF
Online
Penalties:
Any person that commits reporting violations may be held liable for up to $500 per day, not to exceed $10,000.00 and may face up to two years in prison.
