What is the CTA?
In 2021, Congress passed the Corporate Transparency Act (CTA). This law creates a new beneficial ownership information (BOI) reporting requirement that became effective on January 1, 2024. As a part of the National Defense Authorization Act, the goal of the CTA is to prevent money laundering and other illicit activity.
Who is required to report beneficial ownership information (BOI)?
All "reporting companies" must file CTA documentation. Certain businesses, both domestic and foreign, must complete a BOI report to the Financial Crimes Enforcement Network (FinCEN). It is estimated that over 26 million reporting companies will file a BOI report.
There are a few exceptions to this requirement:
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Large Operating Company with more than 20 full-time employees or annual gross revenue of $5 million
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Banks, Public Accounting Firms, Insurance Companies, etc.
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Tax-Exempt Entities, Charities, Religious Institutions, etc.
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When do I need to file a report?
Reports will be accepted starting January 1, 2024 and must be filed by December 31, 2024. For all reporting entities created in 2025 or beyond, the report must be filed within 30 days of creation of the entity.
What Are The Penalties?
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000.
What Information Is Required?
For each individual who is a beneficial owner, a reporting company will have to provide:
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The individual’s name;
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Date of birth;
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Residential address; and
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An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document. The reporting company will also have to report an image of the identification document used to obtain the identifying documentation.
