Article by Mark Stadler, Esq.
Background: To combat money laundering and shell company abuses, the federal government adopted the Corporate Transparency Act to require the reporting of beneficial ownership information (BOI) to the US Treasury Financial Crimes Enforcement Network (FinCEN).
Who Must Report BOI: Most business entities formed by filing state organizational documents with a secretary of state must report their BOI. Limited exemptions are available. Exempt entities include banks, credit unions, investment companies and advisors, insurance companies, and tax-exempt entities. There is also an exemption for “large operating companies” which are generally defined to mean companies with a physical office in the US, more than 20 full-time employees, and more than $5 million in annual gross receipts or sales from US sources.
Reportable BOI: Non-exempt entities must disclose the identity of their beneficial owners, i.e. any individuals who directly or indirectly (a) own 25% or more of the reporting company’s ownership interests or (b) exercise substantial control over the reporting company.
Timeframe for Reporting:
Companies created prior to January 1, 2024 must file an initial report by January 1, 2025.
Companies created during calendar year 2024 must file an initial report within 90 days of creation.
Companies created on or after January 1, 2024 must file an initial report within 30 days of creation.
Penalties for Non-Compliance: A willful failure to provide a required report may result in some or all of the following penalties: (a) civil penalty of $500 per day, (b) criminal penalty of $10,000, and up to two years imprisonment.
How to Report: You can file the report yourself through the FinCEN e-filing website: https://boiefiling.fincen.gov/.
If you use a registered/statutory agent, they can assist with the filing.
Your legal counsel can also assist with the filing and answer your questions regarding these reporting obligations and the availability of exemptions.
Who Will Have Access to Reported BOI: Generally, reported BOI will be available upon request only to federal, state, local and tribal officials for authorized activities related to national security, intelligence, and law enforcement. It will not be accessible by the public.
Further Information: For further information, you can review the extensive information, including the responses to numerous FAQ’s, available at the FinCEN BOI website: https://fincen.gov/boi
You can also contact Mark Stadler at mstadler@burnswhite.com