Updated 4/5/2024
Attention Business Owners! The Corporate Transparency Act was recently DECLARED UNCONSTITUTIONAL by an Alabama District Court, which means that reporting is not required or ON PAUSE until the case is decided in federal court.
But just in case, here's a brief breakdown of the new Beneficial Ownership Information (BOI) filing requirement.
What is a BOI and the Corporate Transparency Act?
The Corporate Transparency Act (CTA), signed into law in January 2021, represents a major shift in the law of corporate disclosure and transparency in the United States and affects most business owners. The primary goal of the CTA is to combat money laundering, terrorist financing, shell companies, and other forms of illicit financial activity by requiring certain companies to disclose their beneficial ownership information.
Under the CTA, companies are required to submit accurate and up-to-date information about their beneficial owners. This refers to detailed data about the individuals who ultimately own or control a legal entity, with the purpose of revealing the true owners behind companies.
Who Needs to File?
The CTA applies to "reporting companies," which are defined as corporations, LLCs (and those designated as S-Corps for tax purposes), or similar entities that are created by filing a document with the state.
Excluded from the CTA are the following businesses:
• Sole proprietorships, general partnerships and certain trusts,
• Businesses with 20 or more employees and $5 million in receipts, and
• Publicly traded companies, certain financial institutions, insurance companies, non-profits, among others.
Thus, IF YOU ARE AN LLC THIS REPORTING REQUIREMENT APPLIES TO YOU! It just depends on when you became an LLC.
Here are the following reporting deadlines:
• Entities formed before January 1, 2024 have until December 31, 2024 to file the BOI
• Entities formed after January 1, 2024 have 90 days to file the BOI after formation
What to Include in Your BOI:
When filing your BOI, you need to provide details about the individuals who qualify as beneficial owners. These are individuals who directly or indirectly control the entity and enjoy over 25% of the economic benefits of its existence. Most LLC owners fall under this category. You will be filing under the federal database called Beneficial Ownership Secure System (“BOSS”) on the FINCEN WEBSITE. As an FYI, there is NO FEE to file!
The key information you will need to file for each beneficial owner is:
1. Full Legal Name: The complete legal name of the beneficial owner.
2. Date of Birth: The birthdate of the beneficial owner.
3. Current Residential or Business Address: The address where the beneficial owner can be contacted.
4. Identification Number: This could be a driver's license number or a passport number.
5. The Nature and Extent of Ownership: Specify the percentage of ownership or control each beneficial owner holds in the reporting company.
Remember, accuracy and completeness are crucial as penalties for non-compliance for non-filing or incomplete filing is $500 per day and up to two years in prison. Make sure to take the time to ensure your BOI is comprehensive and error-free.
