The Corporate Transparency Act (CTA) is effective. It takes effect on January 1, 2024, and imposes a new federal filing requirement for most corporations, limited liability companies (LLCs), and other business entities.

Corporations, LLCs, and other entities subject to the CTA are called “reporting companies.” People who form new reporting companies between January 1, 2024 and December 31, 2024 must file a beneficial ownership information (BOI) report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) within 90 days of forming the company. Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.

The owners of reporting companies created before 2024 must also file a BOI report. They have until January 1, 2025.

Some businesses are exempt from filing. For instance, large operating companies with over 20 employees and $5 million in income. The Reporting Rule exempts twenty-three (23) specific types of entities from the reporting requirements. An entity that qualifies for any of these exemptions is not required to submit BOI reports to FinCEN.

The BOI report must contain the name, the birth date, the address, and an ID number and image of that ID for each “beneficial owner” of the reporting company. These are the human beings who (1) own or control at least 25 percent of the company or (2) exercise “substantial control” over the company. Businesses must update their BOI reports within 30 days of any change in beneficial ownership. 

The BOI report is filed online at a new federal database called BOSS (an acronym for Beneficial Ownership Secure System). There is no filing fee. Government law enforcement and security agencies will use the data from BOI reports to help combat money laundering, tax evasion, terrorism, and other crimes. It will not be available to the public.

The penalties for willfully violating the BOI reporting requirements include 3 civil penalties of up to $500 per day that a violation is not remedied, a criminal fine of up to $10,000, and/or imprisonment of up to two years. There is no limit on the number of people that can be subject to these penalties. Both individuals and corporate entities can be held liable for willful violations of the BOI filing rules. This can include any person who willfully files a false or fraudulent BOI report on a company’s behalf; any person who willfully provides the filer of a BOI report with false information to report; and beneficial owners who willfully fail to file a BOI report or file a false report—this can include a corporation’s officers, directors, and certain of its employees—and an LLC’s members and certain of its employee

Common questions on the Beneficial Ownership Information filing requirements:

  • Why do companies have to report beneficial ownership information to the U.S Department of the Treasury? In 2021, Congress passed the Corporate Transparency Act on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
  • What is beneficial ownership information? Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.
  • Do you have to file a BOI report if you own a single rental property in an LLC? (Yes.)
  • Do you have to file 10 BOI reports if you own 10 LLCs? (Yes.)
  • Is a reporting company required to use an attorney or a certified public accountant (CPA) to submit beneficial ownership information to FinCEN? No. FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers such as lawyers or accountants.
  • Are registered agents responsible for filing the BOI report? (No.)
  • Do the self-employed have to file? (No.)
  • Do I need to list a street address in the BOI report? (Yes.)
  • Do I need to list my Social Security number in the BOI report? (No.)
  • Do I need to list my attorney in the BOI report? (Maybe.)
  • Must I file an updated BOI report if a beneficial owner leaves the company? (Yes.)

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