Important, recent federal legislation primarily impacting smaller businesses, summarized below, requires entities meeting the “reporting criteria” to submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.
This new Corporate Transparency Act (CTA) requires many privately-held corporations, LLCS and other business entities to disclose information about their owners so as to increase transparency, prevent money-laundering or other illegal activities. After the initial filing, additional filings are usually not necessary unless to update or correct information.
CTA imposes these reporting obligations on domestic and foreign entities within the scope of “reporting company” under the statute. Unless exempt, entities are required to file a Beneficial Ownership Information (BOI) report with the U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN). The reporting system can be accessed here: https://boiefiling.fincen.gov/.
This law largely impacts smaller and unregulated entities. “Large operating companies” those with more than 20 full-time employees that maintain an operating presence in the U.S. and have filed a prior, federal tax return reporting 5MM or more in gross receipts or sales are exempt. There are exemptions for other entities such as non-profits, banks and other financial institutions that are already highly-regulated.
Reporting companies must provide legal names and trademarks, as well as current U.S. addresses, which could be either the address of the main business site or, for foreign-based companies, their U.S. operational location. Companies will also need to provide a taxpayer identification number and specify the jurisdiction where formed or registered. Companies that don’t comply by the filing deadline could face fines of up $500/day or criminal sanctions.
We encourage our small business clients, subject to this new law, to file a BOI before the year-end filing deadline and to contact us if there are any questions.