Corporate Transparency Act and Beneficial Ownership Information Reporting Information
Corr Group Law helps clients’ businesses comply with the Corporate Transparency Act (“CTA”) that went into effect January 1, 2024. The firm has prepared this summary of information pertinent to its clients’ businesses, as well as a list of resources and references, to assist clients with the matter.
All businesses in existence within the United States must comply with the CTA by filing a Beneficial Ownership Information Report (“BOIR”) within the timelines provided below.
Where did the Law come from: The CTA was drafted by the Department of Treasury Financial Crimes Enforcement Network (“FinCEN”) as an anti-money laundering law to protect against money laundering, tax fraud, drug trafficking, terrorism financing, and similar crimes by creating a federal database tracking the beneficial ownership of entities. This database will not be made public, but will be retained by FinCEN for its own reference.
Who the Law Applies to: Any “Reporting Company”, defined as:
All domestic entities (LLCs, corporations, S-corps, etc)
Foreign entities licensed to do business in the USA
Subject to very limited exceptions, which are detailed below
What Does the CTA Require: Filing a Beneficial Ownership Information Report, listing the beneficial owner(s) of the business and related information.
Timing for Filing BOIR:
If the entity was formed prior to 2024, it must be filed during 2024, prior to December 31, 2024.
If the entity was formed during 2024, it must be filed within 90 days of the formation of the entity.
If the entity was formed after 2024, it must be filed within 30 days of formation.
Regardless of when the entity was formed, if the beneficial ownership information for the entity changes, an update must be filed within 30 days of the change.
Once you have filed your BOIR, you need not file another one in subsequent years unless and until the beneficial ownership information changes, as provided above.
Information to be reported is:
Jurisdiction of the entity’s formation or registration
The business’s name and any dba’s
Business FEIN
The business’ address
Full legal name of the beneficial owner
A copy of a valid government-issued identification document of the beneficial owner (their driver’s license or passport)
Owner’s residential address
Owner’s birth date
How are BOI Reports Filed: All reports will be filed electronically in FinCEN’s new Beneficial Ownership Secure System (“BOSS”). It is an online portal where the report is submitted, and such submissions are filed without government-imposed filing fees.
Who is a Beneficial Owner: Each individual who directly or indirectly either:
Exercises “substantial control” over such reporting company (the company’s senior officers such as the entity’s Manager or President), and those who have the authority to appoint or remove such senior officers; or
“Owns or controls” at least 25% of the ownership interest of the entity.
Exempt Entities: The following 23 types of entities are exempt from the BOIR filing requirement:
Accounting firm
Bank
Broker or dealer in securities
Commodity Exchange Act registered entity
Credit union
Depository institution holding company
Entity assisting tax-exempt entities
Financial market utility
Governmental authority
Inactive entity
Insurance company
Investment company or investment adviser
Large operating company
Money services business
Other Exchange Act registered entity
Pooled investment vehicle
Public utility
Securities exchange or clearing agency
Securities reporting issuer
State-licensed insurance producer
Subsidiary of certain exempt entities
Tax-exempt entity
Venture capital fund adviser
For further information to determine an exemption’s applicability to your business, please follow this link to FinCEN’s Small Entity Compliance Guide for a table and checklist for each of the 23 exemptions (see Chapter 1.2, “Is my company exempt from the reporting requirements?”).
Required BOIR Updates:
In the event that the entity’s beneficial ownership information changes, the BOIR will need to be updated to reflect the new ownership information within thirty (30) days of the change.
Specifically, if the change in ownership gives a person or entity at least 25% ownership in the entity, or a previous 25% owner is reduced below 25%, an update to the report must be filed. Similarly, if the parties who have authority to exercise “substantial control” (senior officers, such as the entity’s Manager or President) change, an update to the report must be filed.
Resources for further research and information:
The FinCEN Small Business Resources website: https://fincen.gov/boi/small-business-resources
The BOIR homepage: https://fincen.gov/boi
FinCEN site’s BOIR FAQ: https://fincen.gov/boi-faqs
FinCEN Legal Reference Materials: https://fincen.gov/boi/Reference-materials
Please use this information as a general resource for your reference, but note that the information’s application to any individual or business may vary. This information is intended as a general informational resource, and does not constitute legal advice. Please contact the firm for guidance on the CTA’s application in any particular circumstance. The information provided on this site is current as of October 18, 2024, and is subject to change by the US Department of Treasury and US law.