What is the Corporate Transparency Act?

The BOI reporting requirement is part of the 2021 Corporate Transparency Act (CTA). The CTA falls under the Bank Secrecy Act, a set of federal laws that govern record-keeping and report filings for certain financial transactions. Under the CTA, millions of entities will be required to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), which is part of the Department of Treasury.

Why is this reporting requirement so important?

According to FinCEN, it will enhance the ability to protect US national security interests and the US financial system from illicit use. By providing transparency into the ultimate beneficial owners of companies, these filings will help combat illegal activities such as money laundering and fraud.

It's worth noting that most small corporations, limited liability companies, and partnerships will need to comply with this filing requirement.

What are the penalties for non-filing?

Civil penalties can amount to $500 per day for each violation, and criminal penalties include a $10,000 fine and up to two years of imprisonment. Even if your non-compliance is unintentional, there can be severe consequences for business owners who are unaware of this obligation.

Who qualifies?

1. Who qualifies as a beneficial owner?

If someone owns or controls at least 25 percent of the ownership interest of a reporting company, they are considered a beneficial owner. Additionally, individuals with substantial influence over important decisions in an entity, such as senior officers, are also considered beneficial owners.

2. What changes in information require additional reporting?

Any changes in owner information, including tangential changes like home address or telephone number, require additional reporting. It's essential to stay updated and ensure accurate reporting to avoid noncompliance.

3. Who can help provide guidance on this topic?

While CPAs and financial professionals can offer valuable information, providing legal advice on the BOI reporting requirement is considered the unauthorized practice of law. It is best to consult with an attorney for comprehensive guidance tailored to your specific situation.

Read more about this from our referral partner, Rational Unicorn Legal Services.

What is the Corporate Transparency Act? Will the CTA Affect My Business?  — Rational Unicorn Legal Services

How to file

1. Gather the following documents in order to file:
   • Information about business — Full legal name, any trade or doing business name, US address of its principal place of business or street address of the primary location in the US where it conducts business, jurisdiction of formation and registration (if applicable), and taxpayer identification number (EIN).
   • Information about each business owner and company applicant — Full legal name and date of birth of the individual, current address, unique identifying number (such as from a passport), and an image of the identifying document.