The Corporate Transparency Act (“CTA”) was enacted in 2021 as an expansion of anti-money laundering laws and is intended to combat illicit activities such as money laundering, financing of terrorism, tax fraud and corruption. Effective January 1, 2024, the CTA requires most businesses file a Beneficial Ownership Information (BOI) Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Who is required to file with FinCEN?
A domestic reporting company is a corporation, limited liability company or any entity that was created by filing or registering with a secretary of state or similar office under a state law or laws of an Indian tribe.
A foreign reporting company is an entity established under the laws of a foreign country and is registered to do business in any state or tribal jurisdiction.
Sole proprietors, trusts, general partnerships and large operating companies are exempt from the BOI filing requirement. A large operating company is defined as 1) having more than 20 full time employees, 2) a physical presence in the United States, and 3) gross receipts in excess of $5 million on its prior year federal income tax return.
It should be noted that single member LLCs are NOT exempt from the filing requirement.
Who is a Beneficial Owner?
A beneficial owner is an individual who, directly or indirectly, either exerts substantial control over a reporting entity or owns or controls 25% of a reporting entity.
What Information is Reported to FinCEN?
A BOI Report includes the following information:
1. The reporting entity’s full legal name, trade name, current address, federal taxpayer identification number and where it was formed.
2. The reporting entity’s beneficial owners. A beneficial owner is required to report their full legal name, date of birth, current address, unique identifying number from a recognized issuing jurisdiction (driver’s license or passport) and a picture of the document with the unique identifying number.
When is the BOI Report due?
An entity established before January 1, 2024 is required to file its initial report by January 1, 2025.
An entity established after January 1, 2024 is required to file its initial report within 30 calendar days of the entity being created.
Once a reporting entity has filed its initial report, the reporting entity is required to update the information filed with FinCEN only when that information changes.
How do I file a BOI Report?
BOI Reports are filed electronically via FinCEN’s e-filing portal at https://www.fincen.gov/boi. You can complete a web based form or upload a completed pdf.
Should you have any questions regarding the CTA and your filing requirements, please contact your WSM accountant.
