The Corporate Transparency Act is designed to combat financial crimes, including money laundering, tax fraud, and the facilitation of illicit activity. It requires an extensive scope of entities report information about their owners and control persons to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the United States Treasury. Most or all States do not require information about the beneficial owners of corporations, limited liability companies, or other similar entities. It is estimated that more than 2,000,000 such entities are being formed each year.
If your company existed prior to January 1, 2024, you have until January 1, 2025 to file the Beneficial Ownership Information (BOI) report. You are only required to file this report once, unless ownership changes. Companies created after January 1, 2024 have 90 calendar days to file their report. Only owners with a beneficial interest – 25% or above – must report. Failure to file the BOI report could result in penalties of up to $500 for each day the violation occurs or a total fine of up to $10,000.
There are twenty-three specific types of entities that are exempt from reporting, these entities are regulated by another government authority that has the beneficial ownership information for the company (i.e., bank, credit union, investment advisor, etc.). As a result, most companies, particularly small entities, are required to file.
The good news, it is a simple form that should not take very long to complete online: FinCEN. The Reporting Company information is straightforward: name of the entity, DBA if any, U.S. address, TIN or EIN. The Beneficial Owner Information includes: full legal name, date of birth, current address and a unique identifying number and image of one of the following: U.S. passport, State driver’s license, or an identification document issued by a state, local government, or tribe.
You can find more detailed information on the FinCEN page Small Entity Compliance Guide, the above is only a summary and there may be a unique situation that applies to your company (i.e., foreign reporting company, Tribal jurisdiction). Taking the time to understand and comply with the Corporate Transparency Act is essential to avoid penalties and ensure your business meets its legal obligations. If you have any questions or need further assistance, feel free to reach out. If you are interested in reading the act: The Corporate Transparency Act.
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