In 2021, Congress enacted the Corporate Transparency Act (CTA) to combat illicit activities such as tax fraud, money laundering, and terrorism financing, by capturing detailed ownership information for U.S. businesses operating in or accessing the nation’s market.

As of Jan. 1, 2024, companies are required to report “Beneficial Ownership Information (BOI)” to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Dept. of the Treasury. This is defined as identifying information about individuals who directly or indirectly own or control a company. 

Companies formed prior to Jan. 1, 2024, have until the end of the year to file an initial BOI report. However, companies created or registered on or after Jan. 1, 2024, and before Jan. 1, 2025, have only 90 calendar days after receiving notice of the company’s creation or registration to file. This window becomes even tighter after the first of the year; companies created or registered on or after Jan. 1, 2025, will have just 30 calendar days after receiving notice of their creation or registration confirmation to file.

The process is straightforward, secure and free, but noncompliance can result in civil and criminal penalties. Also, it’s not an annual requirement. Unless a company needs to update or correct information, a report must be submitted only once.

Companies required to report BOI include:

1.      A corporation, a limited liability company (LLC), or company otherwise created in the U.S. by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or 

2.      A foreign company registered to do business in any U.S. state or Indian tribe.

Twenty-three types of entities are exempt, including publicly traded companies, nonprofits, and certain large operating companies. A full list of exemptions is available in the FAQ section (item C.2) of FinCEN’s website or within FinCEN’s Small Entity Compliance Guide.

To learn more about CTA requirements or the BOI reporting process, visit the FinCEN website, or contact the Colligan Law team at 716- 885-1150 for assistance with this or other business law matters.