New Reporting Requirements for Beneficial Ownership Information

Important Update (December 4, 2024):

A recent federal court ruling has issued a nationwide injunction against the enforcement of the Corporate Transparency Act (CTA). As a result, companies are no longer required to comply with the CTA's reporting requirements at this time.

The information in this article, including filing deadlines and compliance requirements, is impacted by this ruling and may no longer be applicable. For more information on this development, click here to read the latest update.

New Reporting Requirements for Beneficial Ownership Information

The Corporate Transparency Act (CTA), which was passed by Congress in 2021 with bipartisan support, mandates that many businesses operating in the United States must disclose their beneficial ownership information (BOI). This refers to details about the individuals who ultimately own or control the company. These companies must submit this information to the Financial Crimes Enforcement Network (FinCEN), a bureau within the US Department of the Treasury. 

It is important to note this BOI report is separate and unrelated to any tax returns or Foreign Bank Account Reports (FBARs) you may need to file during the year. The goal of the CTA is to increase transparency and help combat financial crimes such as money laundering and terrorism financing.

Who needs to file?

As of January 1, 2024, many companies in the US are required to begin reporting information about their beneficial owners (the individuals who ultimately own or control the company) and their company applicants, as defined below.

You can find resources such as a comprehensive compliance guide, FAQs, multimedia content, and more at www.fincen.gov/boi.

A company may need to report beneficial ownership information to FinCEN if it meets one of the following criteria:

• Domestic Reporting Company: A corporation, limited liability company (LLC), or any entity created in the US by filing a document with a secretary of state or any similar state or tribal office.
• Foreign Reporting Company: A foreign company registered to do business in the US by filing a document with a secretary of state or similar office.

The Small Entity Compliance Guide includes twenty-three (23) types of entities that are exempt from the reporting requirements. You can view details in Chart 2 of the guide here: BOI Small Compliance Guide v1.1. Entities that qualify for any of these exemptions are not required to submit BOI reports to FinCEN.

What specific information does my company need to report?

If your company is required to file this report, you will need to provide the following information:

Required information about the reporting company: Your company must provide the following details:

• Legal entity name
• Any trade name or “Doing Business As” (d/b/a)
• Complete US address
• State, tribal, or foreign jurisdiction of formation
• For a foreign reporting company: state or tribal jurisdiction of first registration
• Taxpayer Identification Number (TIN) or foreign tax ID

Required information about beneficial owners and company applicants: The company must also provide the following information about its beneficial owners and company applicants:

• Full name
• Date of birth
• Address
• Identifying number and issuing jurisdiction: This can be from a non-expired driver’s license, US passport, or an identification document issued by a state, local government, or Indian tribe. If none of these documents exist, a foreign passport may be used. An image of the document must be provided.

Who is a beneficial owner of my company?

A beneficial owner is any individual who, directly or indirectly:

1. Owns or controls at least 25% of the ownership interests of a reporting company; OR
2. Exercises substantial control over a reporting company.

The Small Entity Compliance Guide has detailed graphics, checklists, and examples to help reporting companies identify their beneficial owners.

Does my company have to report its company applicants?

If your company is a reporting company, you may have to also report its company applicants.

Company applicants are defined as:

• The individual who directly filed the documents that created or first registered a domestic or foreign reporting company.
• The individual who was primarily responsible for directing or controlling the filing of the creation or first registration document.

When is reporting required for company applicants?

• If the company was created or registered before January 1, 2024: The company is not required to report company applicants.
• If the company was created or registered on or after January 1, 2024: The company is required to report company applicants in addition to beneficial owners.

When and how should my company file its initial report?

The reporting requirement went into effect on January 1, 2024, and FinCEN began accepting BOI reports on this date.

Key Filing Deadlines:

• Companies created or registered before January 1, 2024: These companies must file their initial BOI report by January 1, 2025.
• Companies created or registered in 2024: These companies have 90 calendar days to file their initial report after receiving actual or public notice that their company’s creation or registration is effective.
• Starting January 1, 2025: New reporting companies created or registered after this date will have 30 calendar days to file their initial report after receiving actual or public notice of the company’s creation or registration.

If your company is required to file a BOI report, you must do so electronically through a secure filing system. FinCEN has published instructions on how to complete the report. You can find these instructions on their website to guide you through the filing process.

Where to file the report?

The BOI report is submitted electronically on the FinCEN website: BOI E-FILING and by selecting “File BOIR.”

Important note:

Currently, GTN is not able to offer services to assist with the completion and filing of the Beneficial Owner Information report or the Company Applicant Information report on your behalf. However, we hope this guide provides valuable insights and support as you navigate the filing process. For additional information, we recommend reviewing available online resources to ensure a smooth completion.

To learn more about BOI reporting requirements, visit www.fincen.gov/boi.

You can also sign up for FinCEN Updates to be immediately notified of beneficial ownership updates via email at www.fincen.gov/boi.

How often do these reports need to be made?

The BOI report does not need to be renewed or updated unless there are changes to the information provided (e.g., a change in ownership or control).

If there is a change to any of the information on the BOI report, an updated report must be filed within 30 days of the change.

What are the penalties for not filing?

FinCEN is committed to ensuring that reporting companies are aware of their obligations to report, update, and correct beneficial ownership information. As this is a new requirement, FinCEN recognizes the learning curve.

If you correct a mistake or omission within 90 days of the original report’s deadline, you may avoid penalties. However, failing to meet your reporting obligations could result in civil and criminal penalties.

Next Steps

Compliance with the Corporate Transparency Act’s beneficial ownership reporting requirements is essential for your company’s continued operation in the US. By understanding your obligations and timely submitting the necessary information, you can avoid penalties and ensure your company remains in good standing. For more information or assistance, visit www.fincen.gov/boi and stay informed about any updates to the reporting requirements.

The information provided above is for general guidance only and should not be utilized in lieu of obtaining professional tax and/or legal advice.