Starting January 1, 2024, a new federal reporting requirement was introduced for many business entities under the Corporate Transparency Act (CTA). This act mandates that certain companies, referred to as “reporting companies,” must file a Beneficial Ownership Information Report (BOIR) with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Here’s what you need to know:
- Who Needs to Report: A “reporting company” includes corporations, limited liability companies, and other similar entities created by filing with a secretary of state or similar office. This also extends to foreign entities registered to do business in the U.S. through such a filing.
- Exemptions: There are 23 types of entities exempt from this reporting requirement, including but not limited to, publicly traded companies, certain financial institutions, and large operating companies (those with more than 20 full-time employees, a physical office in the U.S., and gross receipts or sales over $5 million).
- What to Report:
- Information about the company itself like its name, any trade names, business address, and jurisdiction of formation.
- Information on beneficial owners (those who directly or indirectly own or control at least 25% of the company or have substantial control over it), including name, date of birth, address, and identification details like passport or driver’s license numbers.
- For companies created or registered on or after January 1, 2024, information about the individual who files the document to create or register the company (the company applicant) must also be reported.
- Filing Deadlines:
- Companies existing before January 1, 2024, must file by January 1, 2025.
- Companies created on or after January 1, 2024, have 90 days from receiving notice of creation or registration to file their initial report.
- Purpose: The CTA aims to combat money laundering, terrorism financing, and other illicit activities by enhancing transparency regarding the ownership of entities operating in the U.S.
- Access to Information: The beneficial ownership information is stored in a secure, non-public database accessible only to authorized government authorities, law enforcement, and certain financial institutions for customer due diligence.
This reporting is part of broader efforts to enhance fiscal transparency and combat financial crimes, reflecting recent updates in federal regulations aimed at ensuring businesses adhere to these new standards. This not a tax form but clients may contact the firm for any questions that may have. The process takes less than 30 minutes for most companies under 20 employees.