The Corporate Transparency Act (CTA) was enacted into law for 2021 but does not apply to businesses until 2024. This requires the disclosure of the beneficial ownership information (BOI) of certain entities from people who own or control a company.
What entities are required to comply with this requirement?
Entities organized both in the US and outside the US may be required to file a report. Domestic companies include corporations, limited liability companies (LLC), or any similar entity created by filing a document with the state.
If the entity was not created by filing a document with the state, then there is no filing requirement.
Are there any exemptions from the filing requirements?
Yes. The more common ones are (see the link below for all exemptions): banks, investment advisors registered with the SEC, insurance companies who are subject to supervision by the insurance commissioner, tax exempt entities, and a large operating company. A large operating company has the following: employs more than 20 full time employees in the US, has an office in the US, and has filed a tax return for the previous year that shows more than $5,000,000 in gross receipts or sales (net of returns and allowances) within the US.
Who is a beneficial owner?
A beneficial owner is any individual who, directly or indirectly, either exercises substantial control over a reporting company or owns/controls at least 25 percent of the company. Senior officers of the company can exercise substantial control even if they have no ownership in the company.
When must companies file?
New entities must file within 30 days of creation (for 2024 only, the time frame is 90 days from creation). Existing entities must file by 1/1/25. If a company makes a change (ex: new owner, new officer that can exercise substantial control), an update must be filed within 30 days of the change.
What information will be reported?
Companies will report their full name, any DBA’s, address, state, and IRS identification number.
Beneficial owners will have to report name, birthdate, address, and a unique ID number from an acceptable document (ex: driver’s license or passport) and an image of that document.
What if I don’t file?
The penalty for not complying with this requirement can result in a fine of $500 per day and up to $10,000 with up to two years of jail time.
Where do I file?
The report can be filed here: https://www.fincen.gov/boi. Additional information can also be found on that site.
Can Brunette Tax file this for me?
We are unable to file this for you. This can be considered practicing law which we are not licensed to do. We cannot advise on completing this form either as it would constitute practicing law. The FAQ section on the link above has a lot of information. If you need help with this form, go to the link above or else contact a lawyer.