The purpose of this letter is to bring to your attention the filing requirements under the Corporate Transparency Act for certain taxpayers with a qualified reporting company. This law, passed in 2021, created a new requirement to report beneficial ownership information (BOI) about the individuals who ultimately own or control a company. Starting January of 2024, this report will be required for many domestic and foreign entities, as part of the U.S. government’s efforts to address financial crimes.

You may be required to file a Beneficial Ownership Information Report (BOIR) with the Financial Crimes Enforcement Network (FinCEN) if your company:

1. Is a corporation, limited liability company, or other entity created or registered to do business by the filing of a document with a secretary of state or any similar office in the United States
2. Does not meet one of the exemptions listed in FinCEN’s Small Entity Compliance Guide https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf
3. Is a foreign company registered with the secretary of state or similar office under state law to do business in the United States.

Note: Sole proprietorships, trusts, and general partnerships do not typically require the filing of a formal document with the secretary of state, so they generally are not considered a reporting company and will not have a filing requirement.

Compliance Analysis: Who and What Gets Reported and When?

Under the CTA, information about the reporting company, certain beneficial owners and company applicant is e-filed with the Financial Crimes Enforcement Network (FinCEN).

• “Reporting companies” are generally private, for-profit businesses with less than $5 million in revenue, less than 20 full-time employees and not otherwise already subject to oversight by a federal agency (e.g. financial institutions, public utilities and SEC-registered entities are exempt). Unless a company is one of the 23 specific exemptions, it must report.
• “Beneficial owners” are generally those who hold at least 25% ownership in a reporting company or otherwise exercise “substantial control” of the reporting company. When communicating beneficial ownership rules to clients, my firm adopts the more specific term “reported persons” to signal that not all beneficial owners are required to report to FinCEN (i.e. those with less than a 25% ownership stake) and that persons who exercise substantial control may be required to report even if they have no ownership interest (e.g. a non-owner C-suite officer)!
• “Company applicant” generally means the individual who made the filing that established the business as a separate legal entity (e.g. business owner, attorney, paralegal, etc.) and if applicable, a second individual who directed the filing (e.g. business owner, attorney, accountant, etc.). Reporting companies formed prior to 2024 are not required to report the company applicant.

A reporting company provides legal name, federal taxpayer ID, state of formation and U.S. address. A reported person and company applicant provide legal name, date of birth, current address and unique government-issued ID number (e.g. U.S. passport or state driver’s license accompanied by an uploaded photo copy). These data points are referred to by FinCEN as “beneficial ownership information” (BOI).

Filing must be electronic, it is only through FinCEN’s secure website https://boiefiling.fincen.gov/ and has the following deadlines:

1. Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
2. Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.
3. Reporting companies created or registered on or after January 1, 2025 will only have 30 calendar days to file.
4. Reporting companies that need to update or correct previously reported information have 30 calendar days to file an updated BOIR. There is no annual filing requirement unless reporting information has changed.

Failure to file the Beneficial Ownership Information Report, when required, could result in civil penalties (of up to $500 for each day that the violation continues), criminal penalties (of up to two years imprisonment) and a large fine (of up to $10,000). 

More information is available on the FinCEN’s website: https://www.fincen.gov/boi (which includes the Small Entity Compliance Guide and FAQs about the BOI reporting requirements).

Toolkit: https://www.fincen.gov/boi/toolkit

If you wish for McClenaghan Law Group to file a BOI report, please email us by November 15, 2024 at Amy@LawDublin.com

A fee of $200.00 will be charged per Entity for preparation of this BOI Report. Payment for these services will be due upon receipt. Services for preparation of your return do not include auditing or verification of information provided by you.

Any information provided to our office will be treated as confidential and is subject to disclosure by our firm only at your request or when required by law or regulatory matters.