The Corporate Transparency Act (“CTA”) went into effect as of January 1, 2024. The Act requires timely submission of specified information on new or existing companies and their beneficial owners, regardless of industry.
The purpose of the CTA is to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illicit activities by establishing a national registry of identifying information about the people who beneficially own or control various business entities. The information will be maintained by the Financial Crimes Enforcement Network (“FinCEN”) and is accessible only by law enforcement, government agencies and other officials.
Fulfilling Your Responsibilities
How to file your BOI report online
While disturbing, your “Beneficial Ownership Information Reporting” obligations should not be a daunting task. NOR SHOULD THEY BE IGNORED. Intentional failure to comply with these requirements can result in civil penalties of $500 per day with no cap, criminal penalties of $10,000 and/or imprisonment of up to two years. If the reporting company existed prior to January 1, 2024, it must file its initial BOI report by January 1, 2025. Additional information can be obtained from the BOIR FAQ page
Some of the required information definitions are complex and you should always consult with your attorney and/or your accountant. Make sure you have all of the necessary information prior to attempting to fulfill your obligations. The required information includes all of the following:
1. Reporting Company information: (Name, address, jurisdiction of formation and the entities Tax ID number).
2. Company Applicant Information: (Parties who file and are primarily responsible for controlling the filing of the document)
3. Beneficial Ownership Information (“BOI”). You must provide information on any individual who, directly or indirectly, either: (1) exercises substantial control over the reporting company; or (2) owns or controls at least 25% of the reporting company’s ownership interests. A beneficial owner does not include corporate or other entity owners and can only be an individual. An individual owner may also be a beneficial owner from tiered entity relationships. Required info contains: (1) individual’s name; (2) date of birth; (3) address; and (4) an identifying number from an acceptable identification document such as a passport or driver’s license and the name of the issuing state or jurisdiction. The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.
Practical aspects of filing:
1. Before attempting to file, the filer may want to create for himself and any “Beneficial Owner” a FINCEN ID. This is done at https://fincenid.fincen.gov/landing
2. Download a PDF form from the FINCEN BOI E FILING SYSTEM.
3. Fill out the form. When you have successfully completed the form, return to the first page. It will ask you to do each of the following steps:
-
Validate
-
Edit the Report
-
Save
-
Print (Make sure you print a copy for your records)
-
Ready to File.
4. When you get to the ready to file page, you will need to submit the form by providing your name and email address. You then have to either drag and drop or choose the PDF you just filled out and upload the document.
5. Check the Captcha box to prove you are human.
6. Submit the form and print a copy of the receipt. If you are going to file additional similar reports, you can create a duplicate of your first f iling and use that as a template for filings on other entities.