The Financial Crimes Enforcement Network (FinCEN) established a beneficial ownership information requirement (BOI) under the Corporate Transparency Act (CTA) whereby most U.S entities must report information on their beneficial owners to FinCEN starting on January 1, 2024. Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

Who is required to report under the CTA’s BOI reporting requirements? 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 has registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

Which companies are exempt from reporting requirements?

• Large operating entities that meet all of the following criteria:
  • Employ more than 20 people in the U.S.
  • Had gross revenue over $5 million on the prior year’s tax return
  • Has a physical office in the U.S.
• Inactive entities that meet all of the following criteria:
  • Was operative/existed on or before January 01, 2020
  • Not engaged in active business
  • Not owned by a foreign person
  • Has not experienced a change in ownership in the preceding 12-month period
  • Has not received/sent funds in an amount greater than $1,000 in the preceding 12-month period
  • Does not own any assets inside or outside the U.S.
• Others are Publicly traded companies, Banks, Public Utility etc.

When must “reporting companies” file BOI?

• New entities (created/registered after Dec. 31, 2023) – must file an “Initial Report” within 30 days of incorporation
• Existing entities (created/registered before Jan. 01, 2024) – must file an “Initial Report”  by Jan. 01, 2025
• All “reporting companies” that have changes to previously reported information or discover inaccuracies in previously filed reports – must file within 30 days, an “Updated Report” or “Corrected Report” respectively.

What are the penalties for non-compliance?

• The willful failure to report complete or updated beneficial ownership information to FinCEN, and/or
• The willful provision of or attempt to provide false or fraudulent beneficial ownership information, may result in:
  • Civil penalties of up to $500 per day that violation continues
  • Criminal penalties include a $10,000 fine and/or up to two years of imprisonment

For more information, please visit https://www.fincen.gov/boi