What is the Corporate Transparency Act? The Corporate Transparency Act will require domestic or foreign companies, registered to do business in any state or tribal jurisdiction in the United States, to submit a beneficial ownership information (BOI) report to the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN).
A published compliance guide can be found here: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.pdf
Corporate Transparency Act FAQs
• When does the Corporate Transparency Act start?
The Corporate Transparency Act (CTA) will go into effect January 1st, 2024.
• When do I need to file a beneficial ownership information (BOI) report?
Companies formed prior to January 1st, 2024, will have until January 1st, 2025, to file their initial beneficial ownership information (BOI) report.
Companies formed after January 1st, 2024, will have 30 days after receiving notice of their company’s creation or registration to file their initial BOI reports.
• Will these BOI reports be public information? Will I lose my anonymity?
No, these reports will not be shared with the public. “FinCEN will store BOI reports in a centralized database and only share this information with authorized users for purposes specified by law. The database will use rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level.”
• Is my company exempt from the CTA reporting requirements?
The Reporting Rule exempts twenty-three (23) specific types of entities from the reporting requirements listed below.
1. Securities reporting issuer
2. Governmental authority
4. Credit union
5. Depository institution holding company
6. Money services business
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity
21. Large operating company (“demonstrating more than $5 million in gross receipts or sales”)
22. Subsidiary of certain exempt entities
23. Inactive entity
• What information should I collect about my company, its beneficial owners, and its company applicants?
For the Reporting Company:
• Full legal name
• Any trade name or “doing business as” (DBA) name
• Complete current U.S. address
• State, tribal, or foreign jurisdiction of formation
• Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) (including an Employer Identification Number (EIN))
• For a foreign reporting company only, state or tribal jurisdiction of first registration
• If a foreign reporting company has not been issued a TIN, report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction.
For each Beneficial Owner and Company Applicant:
• Full legal name
• Date of birth
• Complete current address
» Report the individual’s residential street address, except for company applicants who form
or register a company in the course of their business, such as paralegals. For such individuals,
report the business street address. The address is not required to be in the United States.
• Unique identifying number and issuing jurisdiction from, and image of, one of the following
» U.S. passport
» State driver’s license
» Identification document issued by a state, local government, or tribe
» If an individual does not have any of the previous documents, foreign passport
• What happens if I do not file a BOI report for the Corporate Transparency Act?
Failure to report, or attempting to provide false or fraudulent information, may result in a civil or criminal penalty. This can include civil penalties of up to $500 for each day of violation, “or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000.” Senior officers of an entity that fails to file a required report may be held responsible for that failure.
If you are a business owner looking for more information on the Corporate Transparency Act, and how it affects your operations, contact a business attorney today. They can provide some insight into what to expect and provide details of the reporting requirements to make sure your business is compliant. Understanding the reporting process may take some time, but taking a proactive approach will better ensure that your business operations keep running and give you some peace of mind.