Corporate Transparency Act: Revised BOI Reporting Rules

Deadline Details

Pre-2024 Entities (formed/registered before January 1, 2024): These entities have longer to comply. They must file their initial beneficial ownership report by January 1, 2025.

2024 Entities (formed/registered during 2024): These entities have earlier deadlines depending on when they were formed:

Post-2024 Entities (formed/registered after January 1, 2025): These entities face the shortest deadline – an initial report due within 30 days of formation/registration.

Regardless of the initial deadline based on formation date, any changes to beneficial ownership information must be reported within 30 days of the change. This includes changes like:

• New beneficial owners exceeding the 25% ownership threshold.
• Existing beneficial owners exceeding or falling below the 25% ownership threshold.
• Changes in a beneficial owner’s personal information (name, address, etc.).

Penalties and oversight: The cost of non-compliance with the CTA

Reporting companies have 30 days to fil an updated report, after the initial filing, to note any changes to previously reported information. Reporting companies have 30 days to correct inaccurate information in previously filed report, after they become aware of any errors.

While reports filed with FinCEN are not available to the general public, certain government agencies — including those involved in national security, intelligence and law enforcement, as well as the IRS and U.S. Treasury Department — will have access to the information.

The penalties for failing to comply with the new corporate transparency reporting rules, either through omission or a fraudulent report, could result in civil fines of $500 per day for the duration the report is missing or remains inaccurate. Failing to comply could also trigger a criminal penalty of a $10,000 fine or even a two-year jail term.

What should your company do now to ensure compliance?

1. Determine if your company needs to comply:

• Review the types of entities covered by the CTA. (E.g., LLCs, corporations formed in the US, foreign entities registered to do business in the US).
• If your company falls under the categories mentioned, further assess whether any exemptions apply (e.g., publicly traded companies, certain regulated entities).

2. Familiarize yourself with the reporting requirements:

• Understand what information needs to be reported about beneficial owners (name, date of birth, address, ownership percentage, control explanation).
• Learn about company applicant information that must be included.
• Stay updated on FinCEN’s guidance and regulations related to the CTA reporting process.

3. Identify and collect beneficial ownership information:

• Develop a process to identify and verify individuals who meet the definition of beneficial owners (25% ownership or substantial control).
• Collect required information from them, including government-issued ID documents and proof of address.
• Consider internal policies to encourage cooperation from shareholders and stakeholders.

4. Establish internal procedures for reporting and updates:

• Designate a point person or team responsible for handling CTA compliance.
• Implement procedures for gathering and submitting initial reports in time.
• Set up a system for tracking changes to beneficial ownership information and promptly reporting updates within 30 days.

5. Consider legal and technological resources:

• Consult with legal counsel specializing in the CTA for specific guidance and potential exemption possibilities.
• Explore software solutions or platforms that can help manage beneficial ownership information and streamline reporting.

Additional Tips

Communicate the CTA and compliance requirements to relevant personnel within your company, and proactively collect documentation and keep records well-organized for future reference. Be sure to stay informed about any legislative updates or changes to the CTA regulations.

By taking these proactive steps, your company can be prepare to comply with the Corporate Transparency Act to avoid potential penalties. Remember, early preparation can save time, resources, and potential legal troubles in the long run.

Disclaimer: This information is intended for general knowledge purposes only and does not constitute legal advice. Please consult with qualified legal counsel for specific guidance on the Corporate Transparency Act and its application to your company.