Congress passed the Corporate Transparency Act in 2021.  The Corporate Transparency Act and its requirements took effect on January 1, 2024. Under this Act, certain business entities are required to file a Beneficial Ownership Information Report (a “BOIR”) with the U.S. Department of the Treasury. Specifically, such business entities must file BOIRs, including the information for each beneficial owner, with the Financial Crimes Enforcement Network (FinCEN).

When do I need to file?

The deadline is quickly approaching for any business entity that is required to file a BOIR (a “reporting company”). Required reporting companies formed before January 1, 2024 have a filing deadline of December 31, 2024. For any required reporting company formed on or after January 1, 2024 through December 31, 2024, the filing deadline is ninety (90) days after the effective creation or registration date.  The deadline for any required reporting company formed on or after January 1, 2025 is thirty (30) days after the effective creation or registration date.

After the initial filing, a reporting company must file an updated BOIR within thirty (30) days of any change to the beneficial owners. Examples include, if the company is sold, if one owner sells ownership interest to a new owner, if a beneficial owner has a change of address, or if the management of the entity changes.

Who is a beneficial owner?

A beneficial owner includes:

1. An individual who owns or controls at least twenty-five percent (25%) of the company (such as members, shareholders, or owners of parent companies), or

2. An individual who has substantial control over the company (such as senior officers, managers, or important decision makers). In some cases, an individual may be included under both requirements.

Please note that the company applicant must also be included in the BOIR if the entity was formed after January 1, 2024. If the reporting company was formed prior to January 1, 2024, the BOIR does not require the company applicant information. The company applicant is the person who formed the reporting company, such as by filing the Articles of Organization or Articles of Incorporation.

For more information on beneficial owners, the Small Entity Compliance Guide is located at: https://www.fincen.gov/boi/small-entity-compliance-guide

What happens if I do not file?

If your business entity is required to file a BOIR and you fail to complete the BOIR by the deadline or file false or fraudulent information in the BOIR and do not correct such information, you may be subject to civil or criminal penalties including fines and imprisonment.

How do I file?

Instructions for BOIR filings, instructions for obtaining optional FinCEN numbers, and the BOI E-Filing System are located at: https://boiefiling.fincen.gov/

If you have questions regarding whether your business entity is required to file a BOIR, who is considered a beneficial owner of your business entity, or if you need assistance with filing your BOIR(s), please contact the business attorneys at Anderson O’Brien, LLP.

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