The Corporate Transparency Act (CTA) was enacted to combat illicit activities such as money laundering, tax evasion, and terrorist financing by requiring certain entities to disclose information about their Beneficial Owners. The Financial Crimes Enforcement Network (FinCEN) oversees the implementation of this act.
Here are four things to know about Beneficial Ownership Information (BOI) reporting requirements under the CTA.
1. Who Must Report BOI. Most corporations, LLCs, and other similar entities are required to submit BOI to FinCEN, unless they qualify for an exemption. Exemptions apply to certain large entities, publicly traded companies, and heavily regulated industries in the financial services area (such as, accounting firms, banks, and insurance companies).
2. What Information Must Be Reported. The report must include information about each beneficial owner of the entity. A beneficial owner is any individual who directly or indirectly owns or controls 25% or more of the company OR who exercises “substantial control” over the entity. The required information includes detailed personal information such as full legal name, date of birth, current address, and a unique numerical identifier (driver’s license or passport number).
3. When Must BOI Be Reported. Existing entities have up to one year after the regulations take effect to file their BOI report – we advise our clients to file by 12/31/24. Newly formed entities should submit BOI within 90 days of formation. Entities also have 30 days to report changes or inaccuracies in beneficial ownership information.
4. Penalties for Non-Compliance. Failing to comply with the BOI reporting requirements may result in severe penalties, including civil fines of up to $500 per day for each day the violation continues, and criminal penalties of up to $10,000 or two years in prison for willful violations.
Businesses should ensure they understand whether they are required to file BOI reports and what information must be submitted – timely - to FinCEN.
Please reach out to us at jfournier@jeflegal.com or by calling 860-670-3535 if you have questions about your BOI reporting obligations or any other legal issues related to your business or estate planning.