What you need to know about the new Corporate Transparency Act’s BOI requirement for your business

Intro

A new law went into effect on January 1, 2024, requiring all businesses (except Sole Proprietorships) to file a document called the Beneficial Ownership Information Report with the Financial Crimes Enforcement Network (FinCEN). Reports need to be filed by January 1, 2025, or could be subject to up to $500/day fine for every day not in compliance.

Why/What is it

The Corporate Transparency Act (CTA) is a federal law passed by Congress as part of the National Defense Authorization Act of 2021. The law went into effect January 1, 2024. The purpose of the CTA legislation is to assist the Financial Crimes Enforcement Network (FinCEN) in identifying entities that may be involved in money laundering, terrorism, tax evasion, organized crime, and other illegal activities.

Who the law applies to

The law applies to most business entities that were formed via an application. In essence, this includes LLCs, C and S Corporations, General and Limited Partnerships, Professional Corporations, some Non-Profits*, and federally recognized Indian Tribes. Sole Proprietorships are exempt (because these entities are not formed via an application). Click here to view the FinCEN Compliance Guide.

• 501(c)3 non-profits are exempt.

There is an exemption for a business entity that meets ALL of these requirements:

• More than $5 million in gross receipts/sales AND
• More than 20 full-time employees in the USA AND
• An operating presence at a physical office in the USA

Click here to view BOI FAQs on the FinCEN website.

Dates to Remember (Report-by dates):

• A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
• A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
• A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

Filing Details

To file the FinCEN’s BOI yourself on their website, the cost is free.   FinCEN's BOI E-Filing website

How to file: The document is called a Beneficial Ownership Information (BOI).

Besides the basics, like address and contact person information, have ready at your fingertips the following:
(there is a clock running once you start the form and it will boot you if you take too long gathering information)

• Define the “Beneficial Owner”
• An image of a personal identifying ID (driver’s license or passport) will be required to upload
• The entity’s legal name and tax ID
• All the information from the initial filing that created the entity
• Whether a foreign business or foreign funds are involved in the business
• The birthdate of the beneficial owner
• The residential address of the beneficial owner
• The citizenship or residency status of the beneficial owner

Changes to a filed BOI: you have 1 year to report changes in beneficial ownership to FinCEN.

The penalty for not filing or providing false information can be as high as $500/day and possible jail time. There is no penalty for filing even if your business was not required to. When in doubt, report.

Disclaimer: If you feel this article does not contain enough information, or your situation is unique, consult your attorney.

My Opinion (Kerri)

I imagine real criminals won’t bother filing BOIs, but the federal government has to start somewhere. Mostly by weeding out the law-abiding good guys. I suspect this will be a slow process for the federal government, but think of it this way, by eliminating the good guys, the feds will have more time and resources to concentrate on the ones who don’t file (who are more likely to be ‘bad guys’).

Filing Help for Your Business

If you hate doing administrative stuff like this, or don’t have the time, I will be offering a Corporate Transparency Act/BOI Facilitator filing service for a one-time fee to submit your BOI during the months of November and December. Details will be emailed to current clients, and also placed on my website's home page by the end of October 2024.

If interested in this new service, email me to get placed on my processing list (will be done in order received).

In the meantime, contact me with any questions.