Complying with New Corporate Transparency Act

In 2021, Congress passed the Corporate Transparency Act with the goal of reducing money laundering, tax fraud, financing of terrorism, and other illicit financial transactions. The Act, which creates reporting requirements regarding the “beneficial owners” of many companies, went into effect on January 1, 2024. Companies created before 2024 have until January 1, 2025 to comply. 

The following provides an overview of what you need to know. For more information and to e-file your Beneficial Ownership Information (BOI) report, visit www.fincen.gov/boi.

The government has also created the BOI Small Entity Compliance Guide, which may prove helpful. 

Does the Corporate Transparency Act affect my company?

Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States. These companies have to report beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

There are, however, 23 types of entities that are exempt from the beneficial ownership information reporting requirements. The most relevant exemption for our members is “large operating company.” Large operating companies are those that:

•  employ more than 20 full-time employees in the U.S.
• have an operating presence at a physical address in the U.S.
• filed a Federal income tax or information return in the U.S. for the previous year demonstrating more than $5 million in gross receipts or sales, excluding sales from sources outside the U.S., and reported these gross receipts or sales on an applicable IRS form.

Who is a “beneficial owner” of a reporting company?

A beneficial owner is an individual who either directly or indirectly exercises substantial control over the reporting company, such as a senior officer, and/or owns or controls at least 25% of the reporting company’s ownership interests.

What information must be reported about the company?

A reporting company must report its legal name, trade names or DBAs, street address (not a P.O. box), jurisdiction of formation or registration, and Taxpayer Identification Number.

What information must be reported about the beneficial owners?

For each individual who is a beneficial owner, a reporting company will have to provide the individual’s name, date of birth, residential address, plus the identifying number and issuing state or jurisdiction from an acceptable identification document such as a passport or U.S. driver’s license and an image of this identification document. 

When does the BOI report have to be submitted?

If your reporting company was created or registered prior to January 1, 2024, you have until January 1, 2025 to file your report.

Companies created or registered after January 1, 2024 must file the report within 90 calendar days after receiving notice that the company’s creation or registration is effective. This will change to 30 calendar days for companies created or registered after January 1, 2025. 

How is the BOI report submitted? 

Beneficial ownership information must be reported electronically at www.fincen.gov/boi.

Is there a fee for submitting a BOI report?

There is no fee to submit this information.

How often do I have to submit a BOI report?

There is no annual reporting requirement. However, updates or corrections to previously reported beneficial ownership information must be submitted within 30 days of the date of the change.

Who will have access to this data?

The list of entities that may be able to obtain access to this data from FinCEN includes federal, state, local, and tribal officials; certain foreign officials for authorized activities related to national security and law enforcement; financial institutions in certain circumstances, with the consent of the reporting company; and those financial institutions’ regulators. 

What are the potential penalties for non-compliance? 

A person who willfully violates the beneficial ownership information reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues, plus criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information or willfully failing to correct or update previously reported beneficial ownership information.