Beneficial Ownership Information Reporting Requirements and Filing: What You Need to Know

The Corporate Transparency Act (CTA) establishes new beneficial ownership reporting requirements that impact certain U.S. and foreign entities. This regulation aims to enhance corporate transparency and prevent illicit financial activities by requiring covered entities to disclose key details about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

Who Must File a Beneficial Ownership Information Report (BOIR)?

Entities that are subject to these reporting requirements include corporations, limited liability companies (LLCs), and other similar entities formed or registered to do business in the United States. However, some entities, such as certain regulated financial institutions and large operating companies, may qualify for exemptions.

Definition of a Beneficial Owner

A beneficial owner is an individual who either:

• Exercises substantial control over the entity, or
• Owns or controls at least 25% of the ownership interests in the entity.

Additionally, in certain cases, a company applicant—the individual responsible for filing the entity formation documents—may also need to be reported.

Reporting Deadlines and Filing Process

Filing Timeline:

• Newly formed or registered entities must file their Beneficial Ownership Information Report (BOIR) within 90 days of formation or registration.
• Existing companies formed before January 1, 2024, must submit their initial reports by January 1, 2025.
• If there are changes in beneficial ownership, an updated report must be filed within 30 days of the change.

How to File

Entities can electronically file their BOIR through FinCEN’s E-Filing System at: https://boiefiling.fincen.gov/boir/html.

Compliance Resources for Business Owners

For new business owners, determining whether they need to report, who qualifies as a beneficial owner, and how to file can be challenging. To help with compliance, FinCEN provides several resources, including:

• The Small Entity Compliance Guide, which offers clear explanations and examples.
• Step-by-step online instructions for completing the BOIR form.

Consequences of Non-Compliance

Failure to comply with the Corporate Transparency Act can result in civil and criminal penalties, including significant fines and potential legal action. It is essential for businesses to stay informed and meet their reporting obligations to avoid penalties.

Key Takeaways

• The Corporate Transparency Act (CTA) requires certain U.S. and foreign entities to report beneficial ownership information to FinCEN.
• Reports must be submitted electronically via FinCEN’s E-Filing System.
• New companies must file within 90 days of formation.
• Existing companies have until January 1, 2025, to comply.
• Updates to beneficial ownership must be reported within 30 days of any changes.

Non-compliance can result in substantial penalties.