Corporate Transparency Act – Beneficial Ownership Information Reporting Requirement

Dear Valued BMSS Client:

Corporate Transparency Act — Beneficial Ownership Information Reporting Requirement

Many businesses are now required to comply with the Corporate Transparency Act (CTA) that became effective on January 1, 2024. The CTA was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (otherwise known as “BOI”) of certain entities from people who own or control a company.

The beneficial ownership information must be reported to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury that is separate and distinct from the Internal Revenue Service.  Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $500 per day and up to $10,000 with up to two years of jail time.

What entities are required to comply with the CTA’s BOI reporting requirement?

Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. 

Are there any exemptions from the filing requirements?

Currently, there are 23 specific exemptions from this filing requirement. Included within the exemptions list are certain “large operating entities”. To qualify for this exemption, the company must:

• Employ more than 20 people in the U.S.;
• Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
• Be physically present in the U.S.

When must companies file?

Under current law, in general, BOI reporting is only required once unless there are changes to previously reported information.  There are different filing time frames depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.

• Existing entities created/registered before January 1, 2024 — must file by January 1, 2025
• New entities created/registered in 2024 — must file within 90 days
• Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days
• New entities created/registered on or after January 1, 2025 — must file within 30 days

The above information is meant to be general information only. There are many considerations that must be made to determine an entity’s filing requirements and the information that must be disclosed.

We encourage you to please consult your legal counsel as soon as possible to discuss your company’s specific requirements.  Currently, BMSS is not providing BOI consulting or filing services. You can find more information on the BOI filing requirement, as well as the link to file your entity’s report, on the FinCEN website at www.fincen.gov/boi.

You may prefer to utilize a third-party service to assist rather than filing directly through FinCEN’s secure filing system.  Wolters Kluwer, a well-known accounting, tax and legal software provider, offers a suite of solutions to help businesses meet the filing requirements through their CT Corporation BizFilings online service. You can find more information about this as well as the related fees at https://boi.bizfilings.com/app/welcome.

Sincerely,

BMSS Advisors & CPAs