Upcoming Webinar: April 24th, 2024 – The Corporate Transparency Act: Navigating BOI Reporting

Table of Contents

Table of Contents

Background Background

Reporting Requirements: Beneficial Ownership Information (BOI) Quick Reference Guide

BOI Reports must be electronically filed with FinCEN beginning January 1, 2024, to comply with the reporting requirements of the Corporate Transparency Act (CTA).

In 2021, Congress enacted a new piece of legislation intended to deter money laundering, terrorism, and other illegal activities. The law requires certain companies, known as Reporting Companies, to report information about their Beneficial Owners to the Financial Crimes Enforcement Network (FinCEN) unless they qualify for an exemption under the CTA.

Does a Reporting Company have to report its Beneficial Owners?

The following chart shows how to analyze whether a company is a “Reporting Company”?

The following chart shows how to analyze whether a company is a “Reporting Company”?

The Reporting Rule exempts 23 specific types of entities, which are not required to submit BOI Reports to FinCEN:

Exemption No. Exemption Short Title
01 Securities reporting issuer
02 Governmental authority
03 Bank
04 Credit union
05 Depository institution holding company
06 Money services business
07 Broker or dealer in securities
08 Securities exchange or clearing agency
09 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 Larger operating company
22 Subsidiary of certain exempt entities
23 Inactive entity

The failure to report complete or updated Beneficial Ownership Information to FinCEN, or the willful provision of or attempt to provide false or fraudulent Beneficial Ownership Information may result in civil or criminal penalties, including civil penalties of up to $591 for each day that the violation continues, 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 BOI Report may be held accountable for that failure. Additionally, a person may be subject to civil and/or criminal penalties for willfully causing a company not to file a required BOI Report or to report incomplete or false Beneficial Owner Information to FinCEN.

Who is a Beneficial Owner of a Reporting Company?

If the company is a Reporting Company, the next step is to identify its Beneficial Owners.

A Beneficial Owner is any individual who, directly or indirectly:

Exercises substantial control over a Reporting Company.
OR
Owns or controls at least 25% of the ownership interest of a Reporting Company.

A Reporting Company can have multiple Beneficial Owners. Reporting Companies are not required to report the reason (i.e., substantial control or ownership interests) that an individual is a Beneficial Owner. If an individual qualifies as a Beneficial Owner, information about the individual must be reported to FinCEN in a Reporting Company’s BOI Report. There is no maximum number of Beneficial Owners who must be reported.

What steps can I take to identify a Reporting Company’s Beneficial Owners?

Who qualifies for an exception from the Beneficial Owner definition?

What is substantial control?

What is an ownership interest?

Does the Reporting Company have to report its Company Applicants?

Company Applicants are individuals who either directly file the creation or registration document with a secretary of state or similar office or are primarily responsible for overseeing the relevant document.

Only companies formed on/after Jan. 1, 2024, must report Company Applicants. No more than two Company Applicants must be identified.

Does the Reporting Company have to report its Company Applicants?
Does the Reporting Company have to report its Company Applicants?
Does the Reporting Company have to report its Company Applicants?

What specific information does the Reportable Company need to report?

The following checklist may help identify the information about the Reporting Company and
its Beneficial Owners and Company Applicants that are required to collect and report:

Reporting Company

  • Full legal name
  • Any trade name or “doing business as ” (DBA) name
    • Report all trade names or DBAs.
  • Complete current U.S address
    • Report the address of the principal place of business in United States, or if the Reporting Company’s principal place of business is not in the United States, the primary location in the United States where the company conducts business.
  • State, Tribal, or foreign jurisdiction of formation
  • For a foreign reporting company only, State or Tribal jurisdiction of first registration
  • Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) including an Employer Identification Number (EIN)
    • 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.

The Reporting Rule includes four special reporting rules that may affect a company’s reporting obligations:

  • Owned by exempt entity.
  • Minor Child (must report Parent of Guardian’s information and indicate the information is for the minor child).
  • Foreign pooled investment vehicle.
  • Company Applicant reporting for existing companies.

Each Beneficial Owner and Company Applicant

Not all Reporting Companies are required to report information about Company Applicants. See Section 3 for assistance in identifying whether a Reporting Company is required to report information about its Company Applicants.

  • Full legal name
  • Date of birth
  • Complete current address
    • Company Applicants must report the business street address.
  • Unique identifying number and issuing jurisdiction from, and image of one of the following non-expired documents:
    • 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

FinCEN
Identifiers:

Individuals may apply electronically for FinCEN Identifiers. FinCEN will issue each individual a unique identifying number.

Reporting Companies may include FinCEN identifiers in their BOI Reports instead of certain required information about Beneficial Owners and Company Applicants.

When and how should my company file its initial Report?

FinCEN began accepting BOI Reports electronically through its secure filing system beginning January 1, 2024.

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INITIAL REPORT

Required by all companies that meet the definition of a Reporting Company and that do not qualify for an exemption.

Existing Reporting Companies

Existing Reporting Companies

Created or registered to do business in the United States before January 1, 2024. Reports are due by January 1, 2025.

New Reporting Companies

New Reporting Companies

Created or registered to do business in the United States on or after January 1, 2024. Reports are due within 90 calendar days of receiving actual or public notice that the creation or registration of the Reporting Company is effective. *Reporting Companies formed on or after Jan 1, 2025 have 30 days.*

*If a company was previously qualified for an exemption to the Reporting Company definition but no longer qualifies, then the Reporting Company is required to file a BOI Report within 30 calendar days of the date on which the company stops qualifying for the exemption.

If a Reporting Company is required to file a BOI Report, this must be done electronically through a secure filing system. FinCEN published instructions and other technical guidance on how to complete the BOI Report. This guidance is available at: www.fincen.gov/boi.

What if there are changes to or inaccuracies in reported information?

In addition to filing an initial BOI Report, Reporting Companies must also update and correct information in previously filed BOI Reports. Individuals who obtain FinCEN identifiers must also update and correct information previously reported to FinCEN.

UPDATED REPORT

UPDATED REPORT

Required when there is a change to previously reported information about the Reporting Company itself or its Beneficial Owners.

Calendar

Updated Reports are due within 30 calendar days after a change occurs.

CORRECTED REPORTS

CORRECTED REPORTS

Required when previously reported information was inaccurate.

Calendar

Corrected Reports are due within 30 calendar days after the Reporting Company becomes aware or has reason to know of an inaccuracy.

If a Reporting Company files a BOI Report and later qualifies for an exemption from the reporting requirements, the company should file an updated BOI Report to indicate that it is newly exempt from reporting requirements.

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