Corporate Transparency Act and Beneficial Ownership Information Reporting

01/23/2024

Please note that the specific requirements may vary, and it's crucial to refer to the latest guidance and regulations provided by FinCEN for the most accurate and up-to-date information.

New Federal Reporting Requirement

Enacted in 2021, the Corporate Transparency Act (CTA) was established to prevent individuals with malicious intent from benefitting from the ownership of their business entity to facilitate illegal activities and protect the U.S. national security, financial system, and economic integrity.

Beginning January 1, 2024, business entities that meet certain criteria must file a Beneficial Ownership Information Report to the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN). Its purpose is to identify individuals with at least 25% ownership interest or control of the company.

Who Has to Report?

Businesses affected by the Beneficial Ownership Information Reporting (BOIR) requirements are called reporting companies. There are two types of reporting companies:

Domestic Reporting Company

An entity that is a corporation, limited liability company, or any entity that is created by filing a document with the Secretary of State or similar office of a jurisdiction under the law of a state or Indian tribe, and that does not qualify for an exemption.

Foreign Reporting Company

An entity that is a corporation, limited liability company, or any entity formed under the law of a foreign country and registered to do business in any state or Tribal jurisdiction by the filing of a document with a Secretary of State or similar office under the law of a state or Indian tribe, and that does not qualify for an exemption.

Who is Exempt?

There are specific types of entities exempt from the reporting requirements. These exemptions include industries that are already regulated with identifying information, such as publicly traded companies, large private companies, public accounting firms, insurance companies, credit unions, banks, public utilities companies, and certain tax-exempt entities.

FinCEN's Small Entity Compliance Guide provides a flowchart to help identify if a company is a reporting company along with a complete list of 23 reporting company exemptions - See Chapter 1.

When Do I Report?

Reports will be accepted starting on January 1, 2024.

Note: Updates and corrections to previously filed reports must be submitted within 30 days.
Business Formation Date	BOIR Due Date
Prior to January 1, 2024	January 1, 2025
On or after January 1, 2024	Within 90 days of formation
January 1, 2025, or later	Within 30 days of formation

What Information is Required to Report?

The report requests three types of information:

Company Information:Basic business entity information such as the full legal name, including trade (Doing Business As also known as DBA) names, principal office address, jurisdiction of formation, and taxpayer identification number.
Beneficial Owners:Provide the full legal name, date of birth, address, and the identifying number and image of a non-expired U.S. passport, state driver's license, or other eligible identification document for each individual identified as a beneficial owner.
1. Beneficial Owners are defined as anyone with substantial control over the company or who owns or controls at least 25% or more of the ownership interests, or both.
  1. Substantial control indicators: Senior Officer, Appointment and/or Removal Authority, Important Decision Makes, and any catch-all substantial control.
  2. Ownership interest: equity, stock, or voting rights; a capital or profit interest; convertible instruments; options or other non-binding privileges to buy or sell any of the foregoing; and any other instrument, contract, or other mechanism used to establish ownership.
Company Applicants (if applicable): Provide the full legal name, date of birth, address, and the identifying number and image of a non-expired U.S. passport, state driver's license, or other eligible identification document for each individual identified as company applicant.
1. Company Applicants are individuals who are the direct filer or direct or controls the filing action that creates or registers the entity on behalf of the company for example attorneys, paralegals, accountants, etc. Only reporting companies created or registered on or after January 1, 2024 , will need to report their company applicants.
  1. Direct filer: This individual would have actually, physically, or electronically filed the document with the Secretary of State or similar office.
  2. Direct or controls the filing action: This Individual prepares the necessary documents to create the company and directs individual to file the documents.
2. Company Applicants will have to identify and report to FinCEN. All company applicants must be individuals. Companies or legal entities cannot be company applicants. If there was more than one individual involved in the filing of the reporting company creation or first registration at the most there would be two company applicants reported. There are two categories of company applicants - the "direct filer" and the individual who "directs or controls the filing action."

FinCEN's Small Entity Compliance Guide provides flow charts, examples, and detailed information to help identify beneficial owners, types of ownership interest, substantial control indicators and company applicants - See Chapter 2 and 3.

Reporting Requirements Checklist

Reporting Company

Full legal name
Any trade names or "Doing Business As" (DBA) names
Current U.S. principal office address
State, Tribal, or foreign jurisdiction of formation
For a foreign reporting company only, State or Tribal jurisdiction of first registration
Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) (including an Employer Identification Number (EIN))
- If a foreign reporting company has not been issued a TIN, report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction.

Each Beneficial Owner and Company Applicant

Full legal name
Date of birth
Complete current address
Unique identifying number and issuing jurisdiction from, and image of, one of the following non-expired documents:
- U.S. passport
- State driver's license
- Identification document issued by a state, local government, or Tribe
- If an individual does not have any of the previous documents, foreign passport