If you own or operate a limited liability company (LLC), corporation or other business entity in the United States, you may be subject to a new reporting requirement that took effect on January 1, 2024. The Corporate Transparency Act (CTA), a set of new regulations implemented by the Financial Crimes Enforcement Network (FinCEN), requires certain entities to submit a report declaring beneficial ownership information to FinCEN.
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What is beneficial ownership information?
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company. This may include their name, date of birth, address, and identification number (such as a passport or driver’s license number).
Why do companies have to report beneficial ownership information to FinCEN?
The CTA aims to prevent the misuse of shell companies and other opaque ownership structures by bad actors who seek to hide or benefit from their ill-gotten gains. By collecting and maintaining beneficial ownership information in a secure, non-public database, FinCEN will be able to assist law enforcement, national security, and intelligence agencies in their investigations and prosecutions of money laundering, tax evasion, terrorism financing, and other crimes.
Which companies are subject to the reporting requirement?
Companies required to report are called "reporting companies." There are two types of reporting companies:
How do companies report beneficial ownership information to FinCEN?
Companies can report beneficial ownership information to FinCEN using the BOI E-Filing System, an online portal that allows users to submit and update their reports electronically. Companies can also create a FinCEN ID, an optional unique identifier that can be used to verify their identity and streamline their reporting process.
When do companies have to report beneficial ownership information to FinCEN?
Companies that are newly formed or registered to do business in the United States on or after January 1, 2024, must report beneficial ownership information to FinCEN within 90 days of such formation or registration. Companies that were already in existence before January 1, 2024, must report beneficial ownership information to FinCEN by December 31, 2024.
What are the penalties for non-compliance?
Companies that fail to report beneficial ownership information to FinCEN, or that knowingly provide false or incomplete information, may face civil and criminal penalties, including fines of up to $10,000 and imprisonment of up to two years.
Where can companies obtain more information about the reporting requirement?
FinCEN has published a FAQ page that provides answers to common questions about the reporting requirement. FinCEN also offers a chat service that allows users to communicate with FinCEN staff and get assistance with their reporting issues. Additionally, FinCEN has created a brochure, a video introduction, and a video overview that explain the reporting requirement in simple terms. These can be found on the FinCEN website by clicking HERE.
How can we help you with the reporting requirement?
If our law firm assisted you with the formation of your business entity, we are already familiar with your company's structure and beneficial owners. If you would like, we can assist you with determining if your company is subject to the reporting requirement and, if so, with the filing of the appropriate report.
If we did not assist you with the formation of your business entity, we will need to obtain additional information from you, but we can still assist you with the following:
Given the deadlines, and the anticipated number of inquiries, please contact our office as soon as possible if you would like us to assist you with the reporting requirements.
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company. This may include their name, date of birth, address, and identification number (such as a passport or driver’s license number).
Why do companies have to report beneficial ownership information to FinCEN?
The CTA aims to prevent the misuse of shell companies and other opaque ownership structures by bad actors who seek to hide or benefit from their ill-gotten gains. By collecting and maintaining beneficial ownership information in a secure, non-public database, FinCEN will be able to assist law enforcement, national security, and intelligence agencies in their investigations and prosecutions of money laundering, tax evasion, terrorism financing, and other crimes.
Which companies are subject to the reporting requirement?
Companies required to report are called "reporting companies." There are two types of reporting companies:
- 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.
How do companies report beneficial ownership information to FinCEN?
Companies can report beneficial ownership information to FinCEN using the BOI E-Filing System, an online portal that allows users to submit and update their reports electronically. Companies can also create a FinCEN ID, an optional unique identifier that can be used to verify their identity and streamline their reporting process.
When do companies have to report beneficial ownership information to FinCEN?
Companies that are newly formed or registered to do business in the United States on or after January 1, 2024, must report beneficial ownership information to FinCEN within 90 days of such formation or registration. Companies that were already in existence before January 1, 2024, must report beneficial ownership information to FinCEN by December 31, 2024.
What are the penalties for non-compliance?
Companies that fail to report beneficial ownership information to FinCEN, or that knowingly provide false or incomplete information, may face civil and criminal penalties, including fines of up to $10,000 and imprisonment of up to two years.
Where can companies obtain more information about the reporting requirement?
FinCEN has published a FAQ page that provides answers to common questions about the reporting requirement. FinCEN also offers a chat service that allows users to communicate with FinCEN staff and get assistance with their reporting issues. Additionally, FinCEN has created a brochure, a video introduction, and a video overview that explain the reporting requirement in simple terms. These can be found on the FinCEN website by clicking HERE.
How can we help you with the reporting requirement?
If our law firm assisted you with the formation of your business entity, we are already familiar with your company's structure and beneficial owners. If you would like, we can assist you with determining if your company is subject to the reporting requirement and, if so, with the filing of the appropriate report.
If we did not assist you with the formation of your business entity, we will need to obtain additional information from you, but we can still assist you with the following:
- reviewing your company documents and records to identify the beneficial owners and their information
- completing and filing the report on your behalf using the BOI E-Filing System
- creating and managing your FinCEN ID, if you choose to use one
- assisting you with updates to your report when there are changes in your beneficial ownership information
- answering any questions or concerns you may have about the reporting requirement
- representing you in case of any disputes or investigations related to your report
Given the deadlines, and the anticipated number of inquiries, please contact our office as soon as possible if you would like us to assist you with the reporting requirements.
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