In 2019, Congress passed a bill called Corporate Transparency Act (CTA) to address disclosure of corporate ownership and prevent money laundering and financing terrorism. The bill introduces significant reforms to corporate transparency, including changes to current laws regarding corruption, and tax fraud.
Beneficial Ownership Information Reports
The beneficial ownership information report (BOI) is now required for all corporations, limited liability companies and other similar entities doing business in the United States. The BOI must be filed with the Financial Crimes Enforcement Network (FinCen) in a timely and accurate manner. If the BOI is not filed with fraudulent ownership information, businesses, may face civil penalties, possibly including jail time for anyone involved in fraud.
Companies are required to submit completed Beneficial Ownership Information Reports if they are:
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A corporation, a limited liability company (LLC), or other entity that is created in the United States by filing documents with Secretary of State or equivalent office under state laws or local laws in the jurisdiction of a Native American tribe; OR
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A Foreign Company that was registered to do business in any U.S. State or tribal land.
Exemptions
There are 23 exemptions for entities listed in the bill. For example an exemption is granted if the entity is closely regulated or already reporting their beneficial owners.
For reporting companies that were created or registered on or after January 1, 2024, either the individual who filed the registration for the company, or the individual responsible for directing or controlling filing the registration is required to submit their information on the BOI. Reporting companies formed prior to January 1, 2024 are not required to file under that individuals name. If an attorney was used for the registration, his/her name will be reported as the company applicant.
FinCen launched their online portal on January 1, 2024, allowing companies to submit their completed BOI forms online.
Deadlines
If an entity was formed prior to January 1, 2024, the BOI report needs to be completed by January 1, 2025. For entities registered or created after January 1, 2024, the BOI needs to be filed within 90 calendar days of the Secretary of State (SOS) registration date. If the entity will be registered after January 1, 2025, the BOI will need to be filed within 30 calendar days of the SOS registration date.
If there are any amendments needed, companies have 30 calendar days from the initial filing date of the BOI.
