Corporate Transparency Act & the Beneficial Ownership Information Report

author by Liscah Isaboke on Jun. 24, 2024

Business Business Organization Business Government 

Summary: The CTA aims to combat illicit financial activities, by increasing transparency in the ownership structures of companies registered in the U.S. The CTA requires the disclosure of the beneficial ownership information (BOI) of certain entities from people who own or control a company.

Corporate Transparency Act & the Beneficial Ownership Information Report

 What is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) represents a significant shift in the U.S. approach to business reporting and disclosure. Enacted as part of the National Defense Authorization Act for Fiscal Year 2021, the CTA aims to combat illicit financial activities, such as money laundering and terrorist financing, by increasing transparency in the ownership structures of companies registered in the U.S. The CTA requires the disclosure of the beneficial ownership information (BOI) of certain entities from people who own or control a company. Information will be filed with the Financial Crimes Enforcement Network (FinCEN), a division of the US Department of the Treasury.

Note: The CTA empowers law enforcement agencies with the necessary data to track and prosecute criminal enterprises more effectively.

Who is required to report?

The filing requirements apply to single member LLCs, Partnerships, S Corps, C Corps, and all non-profits that are NOT 501(c)3 organizations.

Note: if you do not have ownership in a corporation or LLC, you can disregard this filing requirement.

Who is considered a beneficial owner?

Beneficial owners are defined as an individual who exercises substantial control over a reporting entity, or owner of at least 25% of the entity. Entities with more than 20 employees or gross revenues exceeding $5 Million are exempt from filing, which means the target is essentially small S Corps, Partnerships and single member LLCs.

Note: 501(c) tax-exempt entities and inactive entities are exempt from filing.

When should a beneficial owner file their report?

For entities created in 2023 or before, the deadline for complying with the reporting requirements is 12/31/24. For any new entity created in 2024 or later, you have 90 days to comply. There is no annual reporting requirement, but a change in beneficial ownership will require updated reporting.

Note: fines for not filing are civil penalties of $500 per day, with the potential for criminal penalties as well.

How to prepare your filing?

  • Identify all business entities that are wholly or partially owned or controlled by the reporting company.

  • Determine which entities may qualify for an exemption.

  • Identify the company applicant(s).

  • Establish record keeping and CTA compliance processes.

Note: Any unneeded, non-exempt entities not dissolved by the end of the year 2023 will still be subject to reporting requirements.

Where should you file your report?

Reporting companies will have to report beneficial ownership information electronically through the finCEN website: https://boiefiling.fincen.gov/fileboir

Note: Filing is free. Beware of websites scams and ensure the website is an official government site before filing.

What do you need to file your report?

Reporting Company:

  • Legal Name and DBA (if applicable)

  • Business address

  • EIN

Each Beneficial Owner:

  • Name

  • Date of Birth

  • Address

  • Clear photo of Driver’s License or Passport in .pdf or .jpg format

Note: if you prefer, we can handle the filing for you: For existing clients, once you have compiled your data, please upload information to your client portal on MyCase or email us at info@isabokelaw.com. New Clients may email us at info@isabokelaw.com to begin the process. To receive a 10% discount on services, copy the following code into your email message: IsabokeLawFirm10.

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