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The Corporate Transparency Act (CTA) was enacted as part of the National Defense Act and mandates that millions of entities report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This resource is meant to provide a preliminary overview of the provisions in the CTA.
It is very important that your business complies with the BOI filing requirements to avoid penalties. For entities that were created before 1/1/24, you have until 1/1/25 to file the information. For entities created in 2024, you have 90 days from the creation date to comply.
While the BOI requirements have been successfully contested in a federal court in Alabama, the ruling only applied to certain companies. It is our opinion that you should comply as the penalties are harsh.
Following, you will find a summary of the requirements with links to additional information. The information required is information you would have to provide to anyone that submits the information to FinCEN.
We recommend you consider the following to comply with the BOI filing requirements:
Gather the required information and access www.fincen.gov/boi to enter the information. There is no fee for self-reporting.
Contact your attorney to help with filing.
Access a reputable organization that can help with this filing such as Wolters Kluwer for a fee (appears to be about $200).
Engage Fleming to complete. Our fee will start at $500 per entity and we must receive your request by 11/15/24.
Regardless of which method you choose, you will still need to gather the same information.
If you prefer Rx Advisors to file the BOI on your behalf, contact us at info@fleming-advisors.com. Provide your name and the name(s) of each company you would like us to file. We will send you an engagement letter, and a questionnaire that will need to be fully completed before we can file the information with FinCen.
Who is required to report?
Domestic and foreign entities (including corporations and limited liability companies) that have filed formation or registration documents with a U.S. state (or Indian tribe) are required to report Beneficial Ownership Information (BOI) to the Financial Crimes Enforcement Network (FinCEN) unless they meet one of 23 specified exemptions, including:
Many of the exempt entities are already heavily regulated by the government and therefore already have an obligation to disclose their BOI to a government authority.
Large companies may be exempt if they meet all the following criteria:
Employ more than 20 full-time employees (averaging 30+ hours per week) in the U.S.,
Have a physical office in the U.S., and
Had gross receipts or sales over $5 million on the prior year tax return.
When must companies file?
Existing entities (created/registered before January 1, 2024) must file by January 1, 2025.
New entities (created/registered after December 31, 2023) must file within 90 days.
Reporting companies that have any changes to previously reported information or discover inaccuracies in previously filed reports must file within 30 days.
What information do companies need to report?
Beneficial Owners - A beneficial owner is any individual who, directly or indirectly, either:
Exercises “substantial control” over a reporting company, or
Owns or controls at least 25% of the ownership interests of a reporting company.
“Substantial control” refers to an individual meeting any of four general criteria:
Senior officer
Authority to appoint or remove certain officers or a majority of directors.
Important decision-maker, or
Exerts any other form of substantial control over the reporting company.
Note: A trustee of a trust may exercise substantial control over a reporting company.
Required information:
Full legal name of the reporting company, and any trade name or “doing business as” (DBA) names
Address of the principal place of business in the U.S.
State, Tribal or foreign jurisdiction of formation or registration
IRS Taxpayer ID Number (TIN)
Each reporting company must report the following details on its beneficial owners and, for newly created entities, its company applicant(s):
Name
Date of birth
Address
Unique identifying number and issuing jurisdiction from an acceptable identification document, and an image of such document
What are penalties for noncompliance?
Willful failure to report complete or updated BOI information, or willful attempt to provide false or fraudulent information, may result in:
Civil penalties up to $500 per day that a violation continues, and/or
Criminal penalties, including a $10,000 fine and/or up to two years of imprisonment.
How to File
BOI reports may be submitted electronically through a secure filing system.
FinCEN will begin accepting reports on January 1, 2024.
FinCEN will publish instructions and other technical guidance at www.fincen.gov/boi
Resources from the Financial Crimes Enforcement Network:
An Introduction to Beneficial Ownership Information Reporting
Beneficial Ownership Information Reporting: Frequently Asked Questions
Small Entity Compliance Guide: Beneficial Ownership Information Reporting Requirements – Version 1.0, September 2023.
Note: This compliance guide includes checklists and examples to aid in the determination of whether a company is required to report and the identification of beneficial owners and company applicants.
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