Reporting Requirement for Corporations and LLCs: Understanding Beneficial Ownership Information (BOI) Reporting
If you're a business owner, it's important to know that a new law has gone into effect as of January 1, 2024, mandating corporations and LLCs to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury. This new law is called the Corporate Transparency Act (CTA), and it aims to combat money laundering and terrorism financing by increasing transparency in business ownership.
Who Needs to Report?
The CTA applies to a broad range of reporting companies, including corporations, limited liability companies (LLCs), certain trusts, and non-profit organizations. Beneficial owners, as defined by the act, are individuals who own 25% or more of the company's shares or voting power, exercise substantial control over the company, or direct or control the filing of the BOI report.
What Information Must Be Reported?
Reporting companies will need to disclose information about their beneficial owners, including their name, date of birth, address, and government-issued identification number. Additionally, companies must provide their own name, business address, filing state or jurisdiction, formation date, and taxpayer identification number (TIN).
It's important to note that in certain situations, a "company applicant" (someone who filed formation paperwork) may also need to be reported. This applies to direct filers who formed the company and individuals who directed or controlled the filing action.
How to File the Report?
Reporting companies created or registered before January 1, 2024, have until January 1, 2025, to file their initial report. Companies formed or registered after January 1, 2024, have 90 days from receiving notice of their creation or registration to file. All reports are filed electronically through the FinCEN's Beneficial Ownership Secure System (BOSS).
Penalties for Non-Compliance:
Failing to provide required information, filing false information, or failing to update beneficial ownership information can result in significant penalties, including civil fines of up to $10,000 per violation and criminal charges in severe cases. However, there is a safe harbor provision for unintentional inaccuracies if you promptly correct the information.
Consult with Legal Counsel:
Given the complexities of the CTA and its implications for your business, it's highly recommended that you consult with your legal counsel to determine your specific reporting obligations and ensure compliance. Our experienced team can help you understand the requirements under the CTA and provide guidance on how to stay compliant.
Complying with the new BOI reporting requirement is crucial for businesses that fall under the purview of the CTA. Our experienced team can help you navigate the complexities involved and ensure that you stay compliant with the law.
Don't wait until it's too late – schedule a consultation today to discuss your specific situation and get compliant!
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