Beneficial Ownership Information Year-End Deadline Approaching
Contact Gene Wolf, James W. Brewer, Bobby Maddox, Eddie Moreno, Sergio M. Estrada, Elisa Samaniego, George R. Kennedy and Daniel T. Jaso -
October 29, 2024
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On January 1, 2024, the Corporate Transparency Act (the “CTA”) came into effect. Enacted in 2021, the CTA is a U.S. law designed to combat money laundering and other illicit activities by requiring certain entities to report beneficial ownership information (“BOI”) to the Financial Crimes Enforcement Network (“FinCEN”), a bureau within the U.S. Department of the Treasury.
With certain exemptions, the CTA applies to domestic corporations, partnerships, LLCs, and any other entities formed by filing with a secretary of state or equivalent office, as well as foreign entities registered to do business in any U.S. state (collectively, “Reporting Companies”). Each Reporting Company must report its legal name, street address, jurisdiction of formation, and Taxpayer Identification Number, along with information about each of its “Beneficial Owners.” A Beneficial Owner’s information includes the owner’s name, date of birth, street address, unique identifying number (e.g., passport or driver’s license number), and an image of the identification document (U.S. passport, state driver’s license, government-issued ID, or foreign passport).
A Beneficial Owner is any individual who directly or indirectly (i) owns or controls 25% or more of ownership interests of a Reporting Company, or (ii) exercises “substantial control” over the Reporting Company (which includes serving as a senior officer, having the authority to appoint or remove officers or a majority of directors, or having important decision-making power).
For Reporting Companies created before January 1, 2024, the deadline to file initial BOI reports is January 1, 2025. Reporting Companies formed in 2024 must file their initial reports within 90 days after their formation. Starting on January 1, 2025, newly formed entities must file their BOI reports within 30 days of formation.
Please be aware that willfully violating the BOI reporting requirements can result in severe penalties, including civil penalties of up to $500 for each day that the violation continues, and criminal penalties of up to two years in prison and a fine of up to $10,000.
Although this law has been challenged in states such as Alabama and Michigan, the vast majority of beneficial owners of U.S. businesses are still required to file BOI reports with FinCEN.
The BOI report must be filed electronically through FinCEN’s website at www.fincen.gov/boi. The filing process is straightforward and can be completed on your own. However, if you have any questions, feel free to contact us for assistance.
The above information is only a high-level overview. Please visit www.fincen.gov/boi for additional information.
With certain exemptions, the CTA applies to domestic corporations, partnerships, LLCs, and any other entities formed by filing with a secretary of state or equivalent office, as well as foreign entities registered to do business in any U.S. state (collectively, “Reporting Companies”). Each Reporting Company must report its legal name, street address, jurisdiction of formation, and Taxpayer Identification Number, along with information about each of its “Beneficial Owners.” A Beneficial Owner’s information includes the owner’s name, date of birth, street address, unique identifying number (e.g., passport or driver’s license number), and an image of the identification document (U.S. passport, state driver’s license, government-issued ID, or foreign passport).
A Beneficial Owner is any individual who directly or indirectly (i) owns or controls 25% or more of ownership interests of a Reporting Company, or (ii) exercises “substantial control” over the Reporting Company (which includes serving as a senior officer, having the authority to appoint or remove officers or a majority of directors, or having important decision-making power).
For Reporting Companies created before January 1, 2024, the deadline to file initial BOI reports is January 1, 2025. Reporting Companies formed in 2024 must file their initial reports within 90 days after their formation. Starting on January 1, 2025, newly formed entities must file their BOI reports within 30 days of formation.
Please be aware that willfully violating the BOI reporting requirements can result in severe penalties, including civil penalties of up to $500 for each day that the violation continues, and criminal penalties of up to two years in prison and a fine of up to $10,000.
Although this law has been challenged in states such as Alabama and Michigan, the vast majority of beneficial owners of U.S. businesses are still required to file BOI reports with FinCEN.
The BOI report must be filed electronically through FinCEN’s website at www.fincen.gov/boi. The filing process is straightforward and can be completed on your own. However, if you have any questions, feel free to contact us for assistance.
The above information is only a high-level overview. Please visit www.fincen.gov/boi for additional information.
