THIS MESSAGE IS INTENDED FOR ALL CLIENTS WHO OWN AN LLC, LP, LLP, OR CORPORATION.
Beginning Jan. 1, 2024, entities will have a new reporting requirement under the Corporate Transparency Act. The Beneficial Ownership (BOI) Rule requires certain domestic and foreign companies registered to do business in the U.S. to file reports with FinCEN that identify the entity’s beneficial owners and the persons who applied to create or register the entity. FinCEN stands for Federal Crimes Enforcement Network and is a part of the U.S. Treasury Department. Its mission is to combat money laundering and promote national security.
Significant Federal Penalties for Non-Compliance
Penalties for willfully not complying with the BOI reporting requirement can result in civil penalties of $500 per day, criminal fines up to $10,000 and/or up to two years of jail time.
Who Must File
Reporting companies are those formed in the US or foreign companies doing business in the US, and they must report information about their beneficial owners to FinCEN.
- Any company who had to register their business with the Dept of State anywhere in the United States. It does not matter whether you registered in Pennsylvania, Delaware, Nevada, etc.
- This includes LLCs, LLPs and corporations.
- This does not include sole proprietors or general partnerships even if they filed for a DBA with the Dept of State.
- Exemptions exist for certain entities like public companies, financial institutions, tax exempt entities, and large operating companies with more than 20 fulltime employees working in the US, $5,000,000 in gross receipts, and a physical place of business in the US. Click here for a full list of exemptions.
When Must Companies File?
- Reporting companies that existed before December 31, 2023, must file a report before January 1, 2025.
- New companies registered on or after January 1, 2024, must file within 30 days (90 days in 2024) of registration.
- Any changes to your Beneficial Ownership Information must be filed within 30 days.
Who is considered a beneficial owner?
- Anyone with ownership interests of 25% or more in the company.
- Anyone who exercises “substantial control” over the company. Because of the substantial control test, a reporting company will have at least one reporting owner even if no individual owns 25% of the entity. An individual has substantial control if they make important decisions for the company which includes any senior officers regardless of their formal title.
What Information Must be Reported?
- Each reporting company must disclose the following information:
- Full name of the company and any trade names (DBA)
- Business address, state, or tribal jurisdiction of formation
- IRS Taxpayer Identification, such as the EIN reported on your tax return
- Each beneficial owner must disclose the following information:
- Legal Name
- Birthdate
- Address
- Unique identification number from a government issued ID, such as driver’s license or passport, and include an image of the document
Take immediate action now!
As the CTA is not a part of the tax code, the assessment and application of many of the requirements set forth in the regulations, including but not limited to the determination of beneficial ownership interest, may necessitate the need for legal guidance and direction. As such, since we are not attorneys, our firm is not able to provide you with any legal determination as to whether an exemption applies to the nature of your entity or whether legal relationships constitute beneficial ownership.
We strongly encourage you to reach out as soon as possible to legal counsel with expertise in this area to assist your organization with the steps you need to take to ensure compliance with the CTA, if applicable.
File Your Report on FinCEN’s Website
Click Here to File Your BOI Report on FinCEN’s website
Additional Resources