The Corporate Transparency Act (CTA) was enacted on January 1, 2021, and is under the administration of the Financial Crimes Enforcement Network (FinCEN) within the U.S. Department of the Treasury. The CTA is intended to assist FinCEN with rooting out bad actors in businesses that engage in criminal activity such as drug trafficking, money laundering or fraud.
Going into effect on January 1, 2024, the CTA requires certain “reporting companies” to file a Beneficial Ownership Interest (BOI) report with FinCEN about the individuals who ultimately own or control them. FinCEN has set up a website for e-filing the report and is taking filings now. The site offers frequently asked questions about the BOI reporting as well as penalties for not filing. You can also subscribe for FinCEN updates.
Is Your Company Required to File a BOI Report under the CTA?
According to the FinCEN site, the following entities are considered reporting companies under the CTA.
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
There are 23 types of entities that are exempt from the reporting requirements, and companies should carefully review the FAQs and qualifying criteria before concluding that they are exempt, some of which is found here in the Small Entity Compliance Guide.
What is the Deadline for Filing a BOI Under the CTA?
As of this writing, the deadlines for submitting a BOI are as follows (according to the FinCEN website FAQs). Once submitted, FinCEN states that there is no annual reporting requirement except for updating or correcting BOI reports as needed.
- A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial beneficial ownership information report.
- A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
- Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
A bill recently passed by the U.S. House of Representatives (H.R.5119) is designed to revise the CTA filing deadlines and give reporting companies more time to comply without penalties.
As mentioned earlier in this article, FinCEN has the authority under the CTA to penalize individuals who willfully fail to file a BOI report or willfully file false beneficial ownership information, fail to correct it or update it. Consequences could include severe civil and criminal penalties.
As you review the information provided on the FinCEN BOI website, please know that Anglin Reichmann Armstrong is also watching for CTA updates and BOI requirements for our clients. We will continue to monitor this emerging issue and substantive guidance provided by FinCen during this dynamic compliance period.
Note: This article does not constitute legal or financial guidance by Anglin Reichmann Armstrong, P.C. or by any of its principals or employees. It is not intended to encourage or recommend specific actions by the reader. Consult your legal advisor before commencing with any legal reporting activities.