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The Corporate Transparency Act (“CTA”) is a new federal law that requires most companies, including small businesses and holding entities, to report their ownership information to the U.S. Department of Treasury Financial Crimes Enforcement Network (“FinCEN”). The CTA’s purpose is to create a national database for use by national security and law enforcement agencies to prevent the use of shell companies for criminal activity, including money laundering.
Reporting Companies
Companies required to report are called reporting companies. There are two types of reporting companies:
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
Each company subject to the CTA must file a Beneficial Ownership Information (“BOI”) Report outlining its ownership structure. The information that must be reported is generally about the company’s owners, such as each individual person’s full legal name, date of birth, street address and a unique ID number from a non-expired US passport, state driver’s license, or other government-issued ID card. Depending on management and ownership structure, reporting will range from straightforward to complex, particularly when trusts are involved.
Time for Filing
The Deadline to File the Initial BOI Report Depends Upon When the Company Was Formed:
| Date Company Was Formed: | Deadline: |
| Before January 1, 2024 | January 1, 2025 |
| Between January 1, 2024 and December 31, 2024 | 90 days after formation |
| On or after January 1, 2025 | 30 days after formation |
In other words, if a company is formed during calendar year 2024, it must file an initial BOI Report within 90 days of its formation. This means the new reporting deadline may only be a few weeks away if your company was recently formed. Moreover, a company formed any time before 2024 must file an initial a BOI Report no later than January 1, 2025. If a company is formed on or after January 1, 2025, it must file an initial a BOI Report 30 days after the date it was formed.
After the initial report is filed, there is no ongoing periodic BOI reporting obligation. Instead, the company has the obligation to keep the BOI updated, which typically happens when changes to its ownership occur.
Are There Penalties for Not Filing?
FinCEN warns that failure to submit a BOI Report may result in fines of up to $500 per day and criminal consequences, including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers may be held responsible for non-compliance.
Deka Law Can Help
We can assist you in completing your BOI report or you may complete it on your own by completing the online form located at https://boiefiling.fincen.gov/. If you would like assistance with CTA reporting compliance or to ensure that you receive future communications from us regarding the CTA, please let us know. FinCEN also has a Small Entity Compliance Guide and frequently asked questions to help guide businesses through the reporting requirements, available at https://www.fincen.gov/boi/small-business-resources.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
