Understanding the Corporate Transparency Act

• May 13th, 2024
• Business Law, Corporate

What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) was enacted in 2021 to expose and prevent tax fraud, money laundering, financing of terrorism, and other illicit activity through the use of anonymous, or shell, companies. The CTA requires small business owners to electronically file a Beneficial Owners Information (BOI) Report with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The information is stored in a secure database and accessible to law enforcement and other authorized agencies identified in the CTA. Companies that willfully fail to comply can be subject to criminal and civil penalties, including maximum fines of $10,000 and maximum jail time of two years.

 

 Who Needs to File a BOI report?

Reporting companies include corporations, limited liability companies, and any foreign or domestic company that registered to conduct business in any U.S. State or Tribal jurisdiction or was created by filing of a document with the secretary of state or similar office under the law of a State or Indigenous Tribe. However, there are twenty-three types of entities that are exempt from filing a BOI report.

 

What Needs to be Reported?

Businesses must provide information on the company, company applicants, and all beneficial owners in the initial BOI report. Beneficial owners are individuals who own or control at least 25 percent of ownership interests in a company and individuals who either directly or indirectly have substantial financial or executive control over a company. The initial BOI requires all names, addresses, and the Internal Revenue Service Taxpayer Identification Number with Employer Identification Number of the company, as well as full name, date of birth, address, and proof of a unique identifying number through a non-expired document with an image for the company applicant and all beneficial owners. Once the initial BOI report is filed, any changes made to the required information of the company or the beneficial owners needs to be filed within 30 days of making the change.

 

The FinCEN began taking BOI reports January 1, 2024. Deadlines are as follows:

• Companies that existed prior to January 1, 2024 have one year to file, with a deadline of January 1, 2025.
• New companies that are created or registered between January 1, 2024 and January 1, 2025 have 90 days to file from receiving the actual or public creation or registration notice.
• Companies that are created after January 1, 2025 will have 30 days to file from receiving the actual or public creation or registration notice.
• Any changes or updates to any information provided in the initial BOI report for the company or the beneficial owners, needs to be filed within 30 days of the change being made.

 

The Miller Law Firm, P.A. is able to assist small clients as they navigate this new requirement.

You can contact the Miller Law Firm, P.A. at (864) 527-0413 to set up a consultation.