Many U.S. companies must report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, via an electronic filing system. This requirement is part of the Corporate Transparency Act. The Corporate Transparency Act (CTA) is a U.S. federal law that was enacted in 2021 to enhance transparency in business ownership. The main goal is to combat illicit activities such as money laundering, terrorism financing, and tax fraud.

Who Must Report?

Generally, any corporation, LLC, or similar entity created by filing with a secretary of state or similar state office and is registered to do business in the U.S., must disclose their beneficial owners and company applicants to FinCEN. There are some exclusions for heavily regulated entities already reporting to federal agencies, or companies with business activities not considered high-risk for money laundering, and inactive entities.

Who is a Beneficial Owner?

A beneficial owner is an individual who:

• Exercises substantial control over the company, or
• Owns or controls at least 25% of the company’s ownership interests.

Who is a Company Applicant?

A company applicant is typically the individual who creates the entity by filing the formation or registration documents with the secretary of state.

A reporting company must report its company applicants only if it is either a:

• Domestic reporting company created in the United States on or after January 1, 2024; or
• Foreign reporting company first registered to do business in the United States on or after January 1, 2024.

What Information Must Be Reported?

For each beneficial owner and company applicant, the following information must be reported:

• Full legal name
• Date of birth
• Residential street address
• Identifying number from an acceptable ID (e.g., passport, U.S. driver’s license) and the issuing state or jurisdiction
• An image of the identification document

Filing Deadlines

Following a recent Court of Appeals decision, most reporting companies must now file beneficial ownership information with FinCEN. Recognizing the need for additional compliance time due to the previous injunction, the Department of the Treasury has extended BOI filing for most reporting companies to January 13, 2025.

• Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

Failure to comply with these requirements may result in penalties.

Contact Matthew Tomko at mtomko@tomkocpa.com to learn more.

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Disclaimer: This blog is for informational purposes only and not intended to be taken as professional advice. Always consult a qualified professional for specific guidance. While we aim to keep information accurate and current with tax regulations, be sure to review guidelines annually for updates as they frequently change.

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