As we approach the end of the year, we want to draw your attention to the reporting requirements set by the Corporate Transparency Act (“CTA”) and the upcoming deadline of January 1, 2025 to file an initial beneficial ownership information (“BOI”) report for certain reporting entities.

You may be required to file one or more BOI reports. This alert does not constitute legal advice, but does include basic information about the filing requirements and how to go about making any necessary filings yourself. In some cases the analysis of whether you need to file and what to include in a filing can be difficult. If you would like our help in making the necessary determinations please let your regular GTC contact know.

Regardless of whether you choose to handle CTA matters yourself or seek our help we urge you to act quickly, as it could take some time to collect and submit the necessary information and the January 1, 2025 deadline is approaching fast.

Background on the CTA and BOI Reporting

The CTA was enacted on January 1, 2021, to deter financial crime. As a part of the Anti-Money Laundering Act, the CTA requires the reporting of certain information to national security agencies and government authorities to prevent criminals from concealing illicit money or other property. The BOI reporting requirements, which took effect on January 1, 2024, were established by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) with the purpose of creating a database of individuals who own and control privately held corporations, LLCs and other entities.

Reporting Overview and FAQ

  • Who has to comply with these reporting requirements?
    • Any entity such as a corporation or limited liability company that is formed by a filing with a state or other government entity, unless the entity qualifies for an exemption.
    • Please see below for a list of exemptions.
  • What information needs to be reported?
    • The name of the reporting company and where it was formed.
    • Information about control and beneficial ownership of the reporting company.
    • In some cases, information about the persons involved in forming the reporting company.
  • When do companies have to submit their initial report?
    • The deadline for filing the initial BOI report depends on when the reporting company was created or registered:
      • Formed before January 1, 2024 – deadline is January 1, 2025
      • Formed during 2024 – deadline is 90 days after creation/registration
      • Formed on or after January 1, 2025 – deadline is 30 days after creation/registration
    • How do I submit my initial BOI report?
      • The report can be completed online through FinCEN’s website at https://www.fincen.gov/boi, which provides links to a filing system and to an FAQ and other detailed instructions and guidance.

Additional Information

What is a “reporting company” for purposes of the CTA?

Nearly all small companies fall into this broad category and must file a report. The Act provides exemptions from its filing requirements primarily for larger companies and/or those that are already regulated by agencies that collect similar information.

The Act defines “reporting company” as a corporation, LLC, partnership, business trust or other similar entity that was created by filing a document with the secretary of state or similar office of a U.S. state (a “domestic reporting company”), or that was formed under the laws of a non-U.S. jurisdiction and registered to do business in the U.S. (“foreign reporting company”). Despite this all-encompassing definition of reporting companies, certain entities are exempt from the reporting requirements. The following is a summary of the main exemptions:

Classes of Entities Eligible for Exemption:

  • Large Operating Companies
    • 20+ employees;
    • Physical presence in the U.S.; and
    • Over $5 million in gross receipts or sales
  • Public Companies
    • Applicable to certain issuers of securities
      • Registered under §12 of the Exchange Act; or
      • Required to file information under §15(d) of the Exchange Act
    • Inactive Entities
    • Investment Companies or Investment Advisers
    • Venture Capital Fund Advisers
    • Certain Pooled Investment Vehicles
    • Insurance Companies and Producers
    • Certain Other Highly Regulated Entities
      • Banks, credit unions, holding companies, money transmitting businesses, brokers-dealers, exchange/clearing agencies, and other entities registered with the SEC under the Exchange Act
      • Entities registered under the Commodity Exchange Act
      • Public utility companies
      • Financial market utilities
    • Public Accounting Firms
    • Tax-Exempt Entities
      • Certain entities assisting tax-exempt entities
      • Subsidiaries of certain tax-exempt entities
    • Governmental Authorities

If you believe your company falls into any of the above exemptions, we recommend reviewing the applicable exemption here https://www.fincen.gov/boi-faqs#C_2 and the related information in FinCEN’s Small Entity Compliance Guide, or of course asking your regular GTC contact for help.  If your company was created by filing a document with a secretary of state or similar office and does not meet any of the exemptions then it is likely that the company is required to submit a BOI report.

What information must be reported?

The BOI report must provide information about the reporting company, the reporting company’s “beneficial owners,” and, for reporting companies formed on or after January 1, 2024, their “company applicants.”

Reporting Company Information

A reporting company must disclose the following within its BOI report:

  • Full legal name
  • Any trade, doing business as (dba), or trading names, whether or not formally registered
  • Current address
    • Reporting companies that have their principal place of business in the U.S. must provide its address. Reporting companies that do not have their principal place of business in the U.S. must provide the address of the primary location in the U.S. from which they conduct business. If a company has neither of the above, it may use the street address of the person in the U.S. that the company has designated to accept service of legal process on its behalf.
    • FinCEN has made it clear that PO Boxes and addresses of corporate formation agents or other third parties may not be used to fulfill this requirement.
  • Jurisdiction of formation
    • If a reporting company was formed under the laws of a non-U.S. jurisdiction it should list the jurisdiction where it first registered in the U.S.
  • IRS taxpayer identification number, including an employer identification number
    • Non-U.S. entities that do not have a U.S. taxpayer identification number may list a taxpayer identification number issued by a non-U.S. jurisdiction and the name of that issuing jurisdiction as an alternative.

Individual Information

Beneficial owners are those who (1) exercise substantial control over the reporting company, or (2) own or control at least 25 percent of its ownership interests. FinCEN has clarified that the definition encompasses a variety of ownership interests and includes individuals that are involved in making important decisions on behalf of the reporting company. Therefore, senior officers and others with substantial influence over the reporting company, regardless of their title, are included as beneficial owners. Similar to the classes of excluded entities, the CTA provides a list of exclusion criteria for beneficial owners as well. Beneficial owners who are minors, agents acting on behalf of another, individuals who are not senior officers and act solely in their role as an employee of the reporting company, and certain creditors, are exempt from the filing requirements of the CTA.

For entities created on or after January 1, 2024, the BOI report must also identify “company applicant(s).” Two types of individuals qualify as a company applicant: (1) the individual who files the document creating or registering the company, and, if more than one individual is involved in the filing, (2) the individual primarily responsible for controlling the filing of the relevant document. Any entity that was created or registered prior to January 1, 2024, is not required to report information regarding company applicants. The definition of company applicant excludes state filing office employees, general business formation services, and law firm staff filing the documentation on behalf of a supervising attorney.

A reporting company is required to disclose the following information for each of its beneficial owners, and, if applicable, its company applicants:

  • Full legal name
  • Date of birth
  • Current address
    • For beneficial owners the company should disclose the individual’s residential address, but for company applicants who file or register on behalf of their business, the company must provide the business address
  • Unique identifying number from a nonexpired U.S. passport, state/local/tribal identification document, state-issued driver’s license, or if no such document is available, a passport issued by a non-U.S. government
  • Image of the identification document from above

To promote efficiency FinCEN has created an opportunity to obtain a FinCEN identifier, which can be used in lieu of providing the specific information listed above. However, like the BOI report, the identifier must be updated or corrected within 30 days of any change or discovered inaccuracy in the reporting information. This could be useful to beneficial owners or company applicants who would be identified for multiple reporting companies, or for those who prefer to disclose their information directly to FinCEN rather than through their reporting company. The FinCEN identifier application for individuals can easily be found on FinCEN’s website, and reporting companies that elect to have one can easily request it by checking a box when submitting their initial report.

Who has access to the reported information?

FinCEN stores the BOI report information in the Beneficial Ownership Secure System (“BOSS”), a secure non-public database from which information can only be obtained by request from select groups. BOI report information is exempt from disclosure under the Freedom of Information Act. However, the following are able to request information from the BOSS:

  • S. federal agencies
  • State, local, or tribal law enforcement agencies
  • Federal agencies on behalf of non-U.S. law enforcement
  • Financial institutions authorized by the reporting company for compliance with customer due diligence requirements
  • Federal and state regulators assessing financial institutions for compliance with customer due diligence obligations
  • Officers/employees of the Treasury Department for tax administration purposes

When do I have to submit my initial BOI report?

Reporting companies created prior to January 1, 2024, have until January 1, 2025, to file their initial BOI report. Reporting companies created or registered in 2024 must file their initial report within 90 calendar days of the earlier of (1) reception of actual notice of formation or registration, or (2) the secretary of state’s (or other authority’s) issuance of public notice of formation or registration. All reporting companies created or registered after January 1, 2025, must file their initial report within 30 calendar days of the earlier of the two notices listed above.

How do I submit my initial BOI report and remain in compliance?

Reporting companies may submit their initial report online by using this FinCEN BOIR link. There is no fee associated with submitting the BOI report to FinCEN.

After the filing of the initial report, companies are obligated to report changes or correct inaccuracies to the information within 30 days after such changes are made or inaccuracies are discovered. Also, if an exempt entity no longer qualifies for an exemption from the reporting requirements, it has 30 days from the expiration of its exemption to file its initial report.

What happens if I don’t comply?

There are civil and criminal penalties for violations of the CTA, including a fine of up to $10,000, imprisonment for up to two years, or both.  The statute does not provide any grace period for late filings.  In order to avoid these and ensure compliance, you should prepare and file your initial report before the applicable deadline and put appropriate safeguards in place to ensure the information is kept up to date.  If you have missed a reporting deadline you should promptly seek advice of counsel as to the best way to proceed.