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As part of the government’s efforts to crack down on financial crimes such as money laundering, tax evasion, and the financing of terrorism, almost all Limited Liability Companies (“LLCs”), corporations, limited partnerships, and other closely held entities will be required to file a beneficial information report (“BOI”). The purpose of the report is to make the individuals behind each entity transparent to the government, hence the name of the new law “The Corporate Transparency Act” or “CTA”. The CTA went into effect on January 1st of this year and will create a national database of companies in the U.S. that identifies the individuals with direct and indirect substantial ownership or control over an entity. This database will be overseen by the Financial Crimes Enforcement Network (“FinCEN”), a division of the U.S. Department of Treasury.
What entities (“reporting companies”) are required to file: Domestic Corporations, LLCs, and other business entities that were created by a filing with a secretary of state or a similar office in the United States. Foreign Entities that have registered to do business in the United States.
Who is a Beneficial Owner of a Reporting Company: An individual who either directly or indirectly:
- Exercises substantial control over the reporting company; or
- Owns or controls 25% of the reporting company’s ownership interests.
Examples of individuals with substantial control: a Senior officer, an individual with the authority to appoint or remove a senior officer or a majority of directors, and important decisions maker.
*A reporting company created on or after January 1, 2024, must also report the company’s applicant, the individual primarily responsible for directing the filing of the creation or registration of the entity (i.e. the attorney).
When is the beneficial information report (“BOI”) due:
- Entities created prior to January 1, 2024, must file by January 1, 2025.
- Entities created between January 1, 2024 – December 31, 2024, must file within 90 days of receiving actual or public notice of the entity’s creation or registration.
- Entities created on or after January 1, 2025, must file within 30 days of receiving actual or public notice of the entity’s creation or registration.
What information are reporting companies required to provide:
- Legal name of the entity and any trade name or dba of the entity;
- Principal address of entity (no P.O. Box);
- The jurisdiction in which the entity was formed or first registered, depending on whether it’s a U.S. or foreign company; and
- Entity taxpayer identification number.
Please be advised you are personally responsible for filing a BOI report for each entity where you hold a substantial interest or exert significant control. Your attorney and CPA are not required to fulfill this obligation. There is no fee to file the report. The report must be filed electronically through FinCEN. You can access the BOI report on FinCEN’s BOI E-filing website here.
We are happy to assist you with this new filing requirement. If you wish to engage us to help you file a BOI report for each of your entities, please contact our office as soon as possible.
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