This year, certain companies are required to report specific information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) as part of the Corporate Transparency Act. The new law requires a Reporting Company to complete and file a Beneficial Ownership Information Report (BOI Report) with FinCEN.  Further information to submit a BOI Report can be found here.

 

Which Companies are Required to Report?

Domestic Reporting Companies: a company created under U.S. law by the filing of a document with a secretary of state or a similar office under the law of a State or Tribal jurisdiction. 

 

Foreign Reporting Companies: a company created under foreign law but is registered with a State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office.

 

Are there Exemptions?

There are specific exemptions to this requirement, however, the company must strictly adhere to the definitions of each exemption.  Further information on the exemptions may be found here.

 

Who is a Beneficial Owner?

A beneficial owner is someone who exercises substantial control over the Reporting Company, or someone who owns or controls at least 25% of the ownership interest in the Reporting Company.  Among other examples, an individual who exercises substantial control may be a senior officer, have authority to appoint or remove certain officers or a majority of directors, or is considered an important decision-maker.  Examples of ownership interests may be equity, stock, or convertible instruments used to establish ownership.

 

What is a Company Applicant?

Reporting Companies created on or after January 1, 2024 are required to report its company applicants. This is someone who directly filed the necessary documents to create or register the company, or someone who directed or controlled that filing action.  Reporting Companies created or registered before January 1, 2024 are not required to report its company applicants.

 

When are the Deadlines to File?

If a Reporting Company was created or first registered prior to January 1, 2024, the company has until January 1, 2025 to complete the BOI Report.  Reporting Companies created or first registered on or after January 1, 2024, and before January 1, 2025, have ninety (90) calendar days from receipt of notice that the creation or registration of the company is effective.  Reporting Companies created or first registered after January 1, 2025 have thirty (30) calendar days from receipt of notice that the creation or registration of the company is effective to complete the BOI Report.

 

What Information Should be Reported?

The BOI Report will ask for the company’s trade name, legal name, addresses, state of formation, Tax Identification Number, Employee Identification Number, etc.  For beneficial owners, the form requires their name, date of birth, current address, and a form of acceptable identification.

 

What Happens if a Company Fails to File a BOI Report by the Deadline?

Failure to comply with this requirement may result in civil or criminal penalties.  Civil penalties may be in an amount up to $500 for each day the violation continues past the deadline. Additionally, criminal penalties may be up to two years in prison and a fine of up to $10,000.

 

Please contact us for more information regarding the Corporate Transparency Act and BOI reporting requirements.

 

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This information does not create an attorney-client relationship between the firm and the reader, nor does this information constitute legal advice.