Today, we delve into a crucial update affecting businesses and nonprofits across the United States: the Corporate Transparency Act (CTA) and its new Beneficial Ownership Information Reporting requirement, effective January 1, 2024. This regulation, overseen by the Financial Crimes Enforcement Network (FinCEN), mandates that both types of entities disclose information about individuals who own or control them through a Beneficial Ownership Information Report (BOIR).
1. What is the Corporate Transparency Act?
Enacted to enhance transparency and combat financial crimes such as money laundering and terrorist financing, the CTA aims to create a centralized registry of beneficial ownership information for legal entities. This registry helps law enforcement and regulatory agencies track down illicit activities by identifying the true owners behind corporate entities.
2. Who Needs to File?
All U.S. corporations, Limited Liability Companies (LLCs), and nonprofits are generally required to file a BOIR, unless they qualify for one of the 23 exemptions outlined in the legislation. Exemptions include publicly traded companies and entities already subject to robust regulatory oversight.
3. Filing Deadlines
• Existing Entities: Corporations, LLCs, and nonprofits formed before January 1, 2024, must file by January 13, 2025.
• New Entities: Corporations, LLCs, and nonprofits formed after January 1, 2024, must file within 90 days of incorporation.
• Newly Formed Entities After January 1, 2025: Must file within 30 days of incorporation.
4. How to File
Filing involves submitting detailed information about the entity’s beneficial owners through the FinCEN’s dedicated website. This includes individuals who directly or indirectly control at least 25% of the entity’s ownership or voting rights, or exercise significant managerial control.
5. Conclusion
Navigating regulatory requirements like the Corporate Transparency Act can seem daunting, but timely compliance is crucial. Failure to file or inaccuracies in reporting can lead to penalties and legal repercussions. Therefore, it’s essential for businesses and nonprofits alike to stay informed, prepare necessary documentation, and meet filing deadlines to ensure compliance and mitigate risks.
For more information on how the Corporate Transparency Act impacts your organization or for assistance with filing, consult with one of our attorneys legal experienced in corporate and nonprofit compliance.
This blog post serves as an informational guide and does not constitute legal advice. Each organization’s circumstances may vary, and compliance efforts should be independently assessed by qualified legal professionals.
Important Take-Aways about BOIR
• Enforced by the Financial Crimes Enforcement Network (FinCEN)
• Required for most businesses, unless exempt under the CTA
• Businesses formed in 2024 must file within 90 days of formation
• Deadline for businesses formed before 2024 is January 13, 2025
• Failure to file may result in a $591-per-day fine, up to a total of $10,000