Corporate Transparency Act Compliance: New Reporting Obligations Effective January 2024

Effective January 1, 2024, U.S. small businesses must file beneficial ownership information reports with the Department of Treasury to comply with the disclosure requirements of the Corporate Transparency Act (CTA).

The CTA is in place to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market.

Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) providing details identifying individuals who are associated with the reporting company.

Who is considered a beneficial owner of a company?

According to the CTA, an individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. This person either has a major influence on the reporting company’s decisions or operations, owns at least 25% of the company's shares, or has a similar level of control over the company's equity.

Who should report?

Two types of reporting companies will be required to submit Beneficial Ownership Information reports:

• Domestic reporting company – any entity that is a corporation, a limited liability company, or otherwise created by the filing of a document with a secretary of state or similar office.
• Foreign reporting company – any entity formed under the law of a foreign country and registered to do business in any U.S. state by the filing of a document with a secretary of state or equivalent.

Some entities are intentionally excluded from the law. The CTA provides 23 specific exemptions for circumstances in which an entity need not file a report of BOI.

File your report online.

All companies required to submit beneficial ownership information reports must file online via FinCEN.

You can file one of two ways:

• Complete and upload a PDF. Download a copy of the blank BOIR form as a PDF and fill in the information. Once the PDF is completed, you can upload the completed PDF using this page. Adobe Acrobat is required to open and complete this PDF.
• Use FinCEN’s online platform. You can electronically file by going to the main file information page and follow the prompts. You will need to fill in personal information and upload a photo of an identification document for each beneficial owner.

When must companies report?

Reporting companies established before January 1, 2024, have until January 1, 2025, to file their initial corporate transparency reports. Companies established between January 1, 2024, and January 1, 2025, must file within 90 days from the notification or public announcement of their formation, whichever date comes first. After the initial filing, there is no annual or quarterly requirement; however, reporting companies have 30 days to amend their reports to include updated information. In addition, reporting companies must correct inaccurate information previously filed within 30 days of discovering the error.

Complete information and additional details are available on the FinCen BOI FAQ page. 

 

KVP Law is here to help.

Though you may opt to file your own BOI reports, KVP Law is here to help business owners make sense of this new, broad compliance requirement. We can help determine whether you are required to file a beneficial ownership report or qualify for an exemption from filing; determine which persons for whom information is required; and assist in filing the initial and/or updated reports to ensure they’re completed on time and to FinCEN’s standards.

To ensure your business is on the right side of the law and for further assistance, contact Jim Pickens at jp@kvplaw.com or call (386) 252-1561 ext. 130. Mr. Pickens is a Partner at KVP Law focusing his practice on counseling businesses of all shapes and sizes in various aspects of business law, contract law, corporate and real estate transactions, and business litigation.