Jan 25, 2024

Corporate Transparency Act — Beneficial Ownership Information Reporting Requirement

You may or may not be aware that starting January 1, 2024, many businesses will be required to comply with the Corporate Transparency Act (CTA). 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.

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.

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.

As this is currently a service which falls outside the scope of tax compliance and other permissible services that accounting firms can provide, we encourage you to please consult your legal counsel as soon as possible to discuss your company’s specific requirements.