Beneficial Ownership Information Reporting
The Corporate Transparency Act (CTA), passed in 2021 and which became effective on January 1, 2024, establishes a new reporting requirement for many US domestic companies as well as foreign companies registered to do business in the US.
Under the CTA, affected companies (referred to as reporting companies) are required to report Beneficial Ownership Information, that is, information about the individuals who own or control a reporting company, to FinCEN (Financial Crimes Enforcement Network), a bureau of the US Treasury.
Reporting companies include corporations, limited liability companies (LLCs), companies created by filing documents with a Secretary of State or a similar office under the laws of a US State or Indian Tribe, companies registered to do business in the US by filing documents with a Secretary of State or a similar office under the laws of a US State or Indian Tribe.
The deadline for when a reporting company needs to file its initial Beneficial Ownership Information Report (BOIR) as well as the required information that needs to be included with the filing will vary depending on when the company was created or registered to do business in the US.
Generally, companies created or registered to do business in the US prior to January 1, 2024 have until January 1, 2025 to file. Companies created or registered to do business in the US on or after January 1, 2024 and before January 1, 2025 have ninety (90) days to file after receiving notice of the company’s creation or registration. Companies created or registered to do business in the US on or after January 1, 2025 have thirty (30) days to file after receiving notice of the company’s creation or registration.
In addition, reporting companies will need to update their report when certain information changes and/or to make corrections.
There are also some companies (specifically, twenty-three types of entities) that are exempt from the reporting requirement.
Failure to comply with the reporting requirement and/or willful violations of the CTA including providing false information may result in both civil and criminal penalties. Reporting companies as well as the individuals filing on behalf of reporting companies and/or individuals providing information relevant to the filing should understand their responsibilities and potential liabilities under the CTA.
The Beneficial Ownership Information Report may be filed online using the FinCEN BOI E-Filing System. FinCEN provides two filing methods – PDF BOIR and Online BOIR. The PDF BOIR allows you to prepare the report at your own pace, work offline, save changes as you go, and re-use the PDF BOIR for updates/corrections. The Online BOIR is best for those who have all the relevant information on hand to do a one-time report and filing. Reporting companies should retain in their records a copy of the BOIR submission confirmation and BOIR transcript.
There is no fee to file the Beneficial Ownership Information Report.
Business owners, their authorized agents, representatives, and/or any individual(s) who may be involved with the reporting requirement should carefully review the Beneficial Ownership Information section on the FinCEN website for complete details on the reporting requirements. For questions related to the CTA or BOIR filing, business owners and their teams (if applicable) should consult with legal counsel or contact FinCEN.
Generally, this is not a complicated filing provided business owners and their teams take the time to carefully review the details and reporting requirements, thoroughly understand what needs to be done, compile all the relevant information that needs to be included in the BOIR, diligently review the information for accuracy and completeness, and meticulously go through the filing and submission process.
One final note … New York recently enacted the New York LLC Transparency Act (NYLTA) which mimics the federal Corporate Transparency Act in many ways but applies only to New York Domestic and Foreign Limited Liability Companies (LLCs).
Under the NYLTA, affected LLCs (also referred to as reporting companies) are required to report Beneficial Ownership Information to the NYS Department of State (NYS DOS).
While final details and guidance on the NYLTA reporting/filing requirements are forthcoming, affected business owners should stay apprised of the law and keep an eye out for updates from the NYS DOS to ensure timely filing and compliance.