Corporate Transparency Act — Beneficial Ownership Information Reporting Requirement
We want to make sure all our business clients are aware of this filing requirement. Penalties for non-compliance can result in criminal and civil penalties of $591 per day and up to $10,000 with up to two years of jail time.
We are unable to advise or assist you with completing the forms. It is not a part of your income tax return. Our tax software does not support the required electronic filing of this form. Be cautious of scams.
Most company owners won’t need assistance with this filing. If you do, here are some resources and recommendations:
- FinCEN has provided some YouTube videos: https://www.youtube.com/@fincentreasury
- FinCEN BOI website home page: https://fincen.gov/boi (includes a small entity compliance guide and alert about fraudulent attempts to solicit information)
- FileForms (online provider of BOI Report Filing): https://fileforms.com/pricing. This is one of many online providers. We –recommend you perform you own due diligence when selecting a provider.
- Contact your business attorney
What entities are required to comply with the CTA’s BOI reporting requirement?
Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. Homeowner associations (HOAs) are required to report unless they are organized as a 501(c)(3) tax-exempt organization.
Domestic entities that are not created by the filing of a document with a secretary of state or similar office are not required to report under the CTA.
Are there any exemptions from the filing requirements?
There are 23 categories of exemptions. Included in the exemptions list are publicly traded companies, banks and credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities and certain inactive entities, among others. Please note these are not blanket exemptions and many of these entities are already heavily regulated by the government and thus already disclose their BOI to a government authority.
In addition, certain “large operating entities” are exempt from filing. To qualify for this exemption, the company must:
- Employ more than 20 people in the U.S.;
- Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
- Be physically present in the U.S.
Who is a beneficial owner?
Any individual who, directly or indirectly, either:
- Exercises “substantial control” over a reporting company, or
- Owns or controls at least 25 percent of the ownership interests of a reporting company
An individual has substantial control of a reporting company if they direct, determine or exercise substantial influence over important decisions of the reporting company. This includes any senior officers of the reporting company, regardless of formal title or if they have no ownership interest in the reporting company.
The detailed CTA regulations define the terms “substantial control” and “ownership interest” further.
When must companies file?
There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.
- New entities (created/registered in 2024) — must file within 90 days
- New entities (created/registered after 12/31/2024) — must file within 30 days
- Existing entities (created/registered before 1/1/24) — must file by 1/1/25
- Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days
What sort of information is required to be reported?
Companies must report the following information: full name of the reporting company, any trade name or doing business as (DBA) name, business address, state or Tribal jurisdiction of formation, and an IRS taxpayer identification number (TIN).
Additionally, information on the beneficial owners of the entity and for newly created entities, the company applicants of the entity is required. This information includes — name, birthdate, address, and unique identifying number and issuing jurisdiction from an acceptable identification document (e.g., a driver’s license or passport) and an image of such document.
