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The Corporate Transparency Act

The Corporate Transparency Act was enacted by Congress on January 1, 2021 (“CTA”). This new legislation requires that certain small business entities file a Beneficial Ownership Information Report (“BOI Report”) with the Department of the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The CTA is intended to provide law enforcement with beneficial ownership information of most active corporations and LLCs for the purpose of detecting, preventing, and punishing terrorism, money laundering, and other misconduct through business entities.

For business entities formed before January 1, 2024, you must file the information required by the CTA online by January 1, 2025, at FinCEN’s website at https://boiefiling.fincen.gov. There is no fee to file a BOI Report. For business entities formed on or after January 1, 2024, you must file the information required by the CTA online within 30 calendar days of receiving notice that the creation or registration of the business entity is effective.

Certain entities are exempt from the reporting requirements. A complete list of exempt entities is available on FinCEN’s website. The two most likely exemptions that may apply to you include non-profit entities and large operating entities (companies with more than 20 full-time employees and more than $5 million in gross sales). To see if your entity qualifies for an exemption, or for any other information about the BOI Reporting requirements, you should check FinCEN’s website.

You are required to report the following information about the company in your BOI Report:

  • Full legal name of the company (exactly as it is shown on your Articles of Organization)
  • All assumed business name(s) (ABN), trade name(s), or “doing business as” (DBA) names that the company uses or has registered
  • Principal place of business (must be a U.S. physical street address)
  • Jurisdiction of Formation (e.g., Oregon)
  • EIN (employer identification number) of the company

You are also required to report certain information about the beneficial owners of the business entity. A “beneficial owner” is defined by the CTA as any individual who, directly or indirectly: (a) exercises substantial control over the company, OR (b) owns or controls at least 25% of the ownership interests. Reporting entities are required to identify all individuals who exercise substantial control over the entity. There is no limit to the number of individuals who can be reported for exercising substantial control. An individual exercises substantial control over a reporting entity if the individual meets any of four general criteria: (1) the individual is a senior officer; (2) the individual has authority to appoint or remove certain officers or a majority of directors of the reporting entity; (3) the individual is an important decision-maker; or (4) the individual has any other form of substantial control over the reporting entity.

For business entities formed on or after January 1, 2024, you are also required to report the following information for company applicants. “Company Applicants” are individuals who (a) directly filed the documents creating the company, and, if different, individuals who (b) controlled or directed filing the documents creating the company. Every company formed on or after January 1, 2024 will report a direct filer as a company applicant; those companies may have to report a controlling or directing filer, but no company will report more than two company applicants.

You are required to submit the following information for each beneficial owner listed above to FinCEN on your BOI Report:1

  • Full legal name
  • Date of birth
  • Complete, current residential street address
  • Unique identifying number and issuing jurisdiction from, and an image of, one of the following non-expired documents:
    • U.S. passport
    • State driver's license
    • Identification document issued by a state, local government, or tribe

Finally, please be aware that if there is any change to the required information about your entity or its beneficial owners in a BOI Report that the entity filed (e.g., name change, address change, new identifying document, or a new ABN), the entity must file an updated BOI Report no later than 30 days after the date on which the change occurred.2 Further, if an inaccuracy (i.e., correction) is identified in a BOI Report that the entity filed, including any inaccuracy in the required information for the entity, its beneficial owners, and/or its Company Applicants, the entity must correct the BOI Report no later than 30 days after the entity became aware of the inaccuracy or had reason to know of it.3 There are no penalties for filing an inaccurate BOI Report, provided it is corrected within 90 calendar days of when it was filed.

There are substantial penalties for failure to file a report. The willful failure to report complete or updated beneficial ownership information to FinCEN, or willfully providing false or fraudulent beneficial ownership information, may result in civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000.

If you have questions about whether you are required to file a BOI Report, contact Bryant, Lovlien & Jarvis. For existing clients, please note unless we have expressly agreed to assist with the filing, you will be responsible for filing the BOI Reports directly with FinCEN.

Footnotes

1. If an individual has obtained a FinCEN identification number and provided it to a reporting company, the reporting company may include such FinCEN ID in its report instead of the information required about the individual. To learn more about FinCEN IDs or to obtain one, go to https://fincenid.fincen.gov.

2. The same 30-day timeline applies to changes in information submitted by an individual in order to obtain a FinCEN ID. A reporting company is not required to file an updated report for any changes to previously reported Company Applicant information.

3. The same 30-day timeline applies to changes in information submitted by an individual in order to obtain a FinCEN ID.

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