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2024 BOI Reporting Requirement

Understand beneficial ownership information reporting requirements under the Corporate Transparency Act As of January 1, 2024, tens of millions of (small) business owners must file a new, and very personal, report as part of the federal Corporate Transparency Act (CTA) – or they risk harsh civil and criminal penalties, including hefty fines and possible time behind bars. In other words: compliance is mandatory. But many affected businesses don’t understand the seriousness of this requirement or even know about its ins and outs – and the rules continue to change. Fortunately, there are resources and experts available to help business owners – as well as legal and accounting professionals – understand what they need to do right now. 1. What is the Beneficial Ownership Information report & the Corporate Transparency Act? The actual report is called the Beneficial Ownership Information (BOI) report – part of the Corporate Transparency Act that Congress passed in 2021 and which establishes uniform reporting requirements for businesses. The BOI lays out in personal detail who owns a business; read: this report will contain personal identifying information about a company’s beneficial owners. The Corporate Transparency Act and Beneficial Ownership Reporting is part of the U.S. government’s efforts to crack down on money laundering, financing of terrorism, tax fraud, and other illegal acts. In fact, the Corporate Transparency Act is part of the federal Anti-Money Laundering Act of 2020 (AML Act). “According to Congress, bad actors – people who are engaged in money laundering and other illicit activities – don’t do it in their own name. They do it through LLCs, corporations, and other similar entities. Right now, when these types of companies are created in the U.S. – or when they’re created in foreign countries and register to do business in the U.S. – they aren’t required to provide the names of the individuals who ultimately own or control the entity. And that means law enforcement has trouble finding out who the individuals are behind these entities. That’s why Congress says that the BOI will help protect national interests,” says Sandra Feldman, Publications Attorney at Wolters Kluwer CT Corporation. Business owners file the BOI with FinCEN – the U.S. Department of Treasury’s Financial Crimes Enforcement Network, which issues the regulation providing the details on who must file a report, when it has to be filed, and what information has to be reported. The CTA is the most impactful piece of federal legislation affecting businesses since the U.S. Securities Laws from the 1930s. And while this type of report is new to the United States, it’s already quite common in many other developed countries. 2. Does every US business have to file a Beneficial Ownership Information report? The requirement is pretty far-reaching, and it’s not always clear which entity must file. “The first step for small business owners is to figure out if their company is affected. There are tools available to help figure out this part, where you can answer a few questions, and in the end, it will give you a general indication of whether or not you have to file,” says Feldman. Based on the current rule, two types of reporting companies have to file a BOI – unless they qualify for an exemption: 1) a domestic reporting company, and 2) a foreign reporting company. 3. Who is exempt from the Corporate Transparency Act? There are 23 categories of entities that are exempt. Most are for entities that are already subject to close federal or state regulation and thus already have to disclose their beneficial ownership information to the government. For example: Publicly traded companies and other entities that file reports under the Securities Exchange Act Financial institutions (banks, credit unions) Money services businesses Securities brokers and dealers Insurance companies State-licensed insurance producers Investment advisors, pooled investments Public utilities Tax-exempt entities, including 501(c) non-profits Inactive entities And more There’s also an exemption for so-called “large operating companies.”  Those are companies that 1) employ more than 20 full-time employees in the U.S., 2) operate at a physical office in the U.S., and 3) have filed a federal tax return for the previous year reporting gross receipts or sales of more than $5 million. The term “has an operating presence at a physical office within the United States” means an entity regularly conducts its business at a physical location in the U.S. that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity. “Again, most small corporations and LLCs probably do not qualify for an exemption, but you should still be familiar with them to know for sure if your company is exempt or not,” says Duynstee. 4. What information is required for the BOI report? First, those required to file a report must determine who their beneficial owners are. Then, they have to report the information about the company and the personal information about their beneficial owners. Plus, companies created or first registered on or after January 1, 2024, also have to report the personal information for their company applicants. 5. What is a Beneficial Owner & what does Beneficial Ownership mean? A beneficial owner is an individual who, directly or indirectly, either 1) exercises substantial control over the reporting company, or 2) owns or controls at least 25 percent of its ownership interests. On the other end, there are five types of individuals who do NOT count as beneficial owners: A minor child (although the personal information of a parent or guardian has to be reported) A nominee, intermediary, custodian, or agent of another individual An employee acting solely as an employee An individual whose only interest in a reporting company is a future interest through a right of inheritance A creditor of the reporting company. 6. What is considered “substantial control” over a reporting company? An individual “exercising substantial control” includes 1) senior officers, 2) people who can appoint and remove senior officers, including the board of directors or similar body, and 3) anyone who directs, determines or has substantial influence over important decisions made by the company. 7. Who is a “company applicant”? “Simply put, a company applicant is the individual who files … Read more

Federal Register: BOI Reporting Requirements

AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury.   ACTION: Advance notice of proposed rulemaking. SUMMARY: FinCEN is issuing this advance notice of proposed rulemaking (ANPRM) to solicit public comment on questions pertinent to the implementation of the Corporate Transparency Act (CTA), enacted into law as part of the National Defense Authorization Act for Fiscal Year 2021 (NDAA). This ANPRM seeks initial public input on procedures and standards for reporting companies to submit information to FinCEN about their beneficial owners (the individual natural persons who ultimately own or control the reporting companies) as required by the CTA. This ANPRM also seeks initial public input on FinCEN’s implementation of the related provisions of the CTA that govern FinCEN’s maintenance and disclosure of beneficial ownership information subject to appropriate protocols. DATES: Written comments on this ANPRM must be received on or before May 5, 2021. ADDRESSES: Comments may be submitted by any of the following methods: • Federal E-rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Refer to Docket Number FINCEN–2021–0005 and RIN 1506–AB49. • Mail: Policy Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN–2021–0005 and RIN 1506–AB49. FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section at 1–800–767–2825 or electronically at frc@fincen.gov. SUPPLEMENTARY INFORMATION: I. Scope of ANPRM This ANPRM seeks comment on FinCEN’s implementation of certain provisions in Section 6403 of the CTA. 1 Section 6403 requires reporting companies (corporations, limited liability companies (LLCs), and similar entities, subject to certain statutory exemptions) to submit to FinCEN specified information on their beneficial owners—the individual natural persons who own or control them—as well as specified information about the persons who form or register those reporting companies. Section 6403 further requires FinCEN to maintain this information in a confidential, secure, and non-public database, and it authorizes FinCEN to disclose the information to certain government agencies for certain purposes specified in the CTA, and to financial institutions to assist in meeting their customer due diligence obligations. In both cases, these disclosures are subject to appropriate protocols to protect confidentiality. This ANPRM seeks comment on numerous questions as FinCEN begins to develop proposed regulations implementing these provisions. While only the regulations implementing the reporting requirements must be promulgated by January 1, 2022, with an effective date to be determined, FinCEN also seeks comment at this time on its implementation of the related database maintenance use and disclosure provisions. Section 6403’s mandate that the final rule on customer due diligence requirements for financial institutions be revised will be the subject of a separate rulemaking, about which the public will receive notice and opportunity to comment. II. Background A. The Bank Secrecy Act Enacted in 1970 and amended most recently by the Anti-Money Laundering Act of 2020, which includes the CTA, the Bank Secrecy Act (BSA) aids in the prevention of money laundering, terrorism financing, and other illicit activity.[2] The purposes of the BSA include, among other things, “requir[ing] certain reports or records that are highly useful in—(A) criminal, tax, or regulatory investigations, risk assessments, or proceedings; or (B) intelligence or counterintelligence activities, including analysis, to protect against terrorism” and “establish[ing] appropriate frameworks for information sharing” among financial institutions and government authorities.[3] Congress has authorized the Secretary of the Treasury (the Secretary) to administer the BSA. The Secretary has delegated to the Director of FinCEN the authority to implement, administer, and enforce compliance with the BSA and associated regulations.[4] FinCEN is authorized to require financial institutions or nonfinancial trades or businesses to maintain procedures to ensure compliance with the BSA and the regulations promulgated thereunder and to guard against money laundering, the financing of terrorism, and other forms of illicit finance.[5] B. Beneficial Ownership of Legal Entities Legal entities such as corporations and LLCs play an important role in the U.S. economy. By limiting individual liability, corporations and LLCs allow owners to manage the risks associated with participating in business ventures. They also facilitate the formation of capital, making it easier to finance large business projects and structure the relationships among individuals engaged in an enterprise. They often can be formed with relatively few formalities and abbreviated (if any) regulatory review and approval, and their availability can be viewed as a stimulus to investment, entrepreneurship, and economic activity. At the same time, legal entities can be misused to conceal and facilitate illicit activity. As Congress recognized in the CTA, “malign actors seek to conceal their ownership of corporations, limited liability companies, or other similar entities in the United States to facilitate illicit activity, including money laundering, the financing of terrorism, proliferation financing, serious tax fraud, human and drug trafficking, counterfeiting, piracy, securities fraud, financial fraud, and acts of foreign corruption[.]” [6] Furthermore, Congress underscored that “money launderers and others involved in commercial activity intentionally conduct transactions through corporate structures in order to evade detection, and may layer such structures . . . across various secretive jurisdictions such that each time an investigator obtains ownership records for a domestic or foreign entity, the newly identified entity is yet another corporate entity, necessitating a repeat of the same process.” [7] The ability to engage in activity and obtain financial services in the name of a legal entity without disclosing the identities of the natural persons who own or control the entity—the natural persons whose interests the legal entity most directly serves—enables those natural persons to conceal their interests. As FinCEN has previously highlighted, such concealment “facilitates crime, threatens national security, and jeopardizes the integrity of the financial system.” [8] U.S. government reports have consistently identified the ability to operate through legal entities without ready identification of their beneficial owners as a key illicit finance risk for the U.S. financial system. The 2018 National Money Laundering Risk Assessment noted that legal entities are misused by illicit actors to disguise criminal proceeds, and that the lack of readily available beneficial ownership information hampers law enforcement investigations, asset seizures and forfeitures, and international cooperation, as well as the ability of financial institutions to conduct customer due diligence (CDD) and identify suspicious activity.[9] Further, the 2020 National Strategy to … Read more

BOI Reporting Requirements Under the CTA

As of January 1, 2024, many domestic entities created, or foreign entities first registered to do business in the U.S., on or after that date are required to report information to the Financial Crimes Enforcement Network (FinCEN) about the individuals who create and ultimately own and control them. Domestic entities created, or foreign entities registered, in the U.S. prior to January 1, 2024 have until January 1, 2025 to report such beneficial ownership information (BOI) to FinCEN. Specifically, these entities (Reporting Companies) must file a report detailing certain identifying information about: (i) the Reporting Company; (ii) the individuals who directly or indirectly exercise “substantial control” of a Reporting Company, or own or control at least 25% of the ownership interests in the Reporting Company (Beneficial Owners); and (iii) for those entities so created or registered on or after January 1, 2024, the individual who directly files the creation or registration document with a secretary of state or similar state office, and, if more than one individual is involved in the filing, the individual who is primarily responsible for directing or controlling the filing (Company Applicants). Many Reporting Companies may not be aware of their obligation to file these reports, known as BOI Reports (BOIRs), or they may have questions about the filing process or the information that must be included in a BOIR. Indeed, FinCEN has been publishing a stream of proposed rules and guidance to clarify and publicize the BOI reporting process and requirements. On this resource page, Arnold & Porter will: Summarize the basic requirements of the BOI reporting rules; Track FinCEN’s continued guidance and rulemaking, and summarize the import for potential filers and entities—particularly financial institutions—who may be entitled to access BOI reported to FinCEN; Track FinCEN’s anticipated guidance and rulemaking regarding revisions to financial institutions’ customer due diligence (CDD) obligations; and Offer our analysis on best practices for complying with the BOI reporting and other CTA requirements. Should you have any questions about the applicability of the BOI reporting requirements or other CTA provisions, please check out the Q & A’s listed at the bottom of this article. Article by Arnold & Porter

BOI – Are You Exempt?

As of January 1, 2024, certain types of corporations, limited liability companies, and other similar entities doing business in the United States must report information about their beneficial owners—the persons who ultimately own or control the company—to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). These new reporting requirements were created under the Federal Corporate Transparency Act to strengthen the integrity of the U.S. financial system by making it harder for illicit actors to use shell companies to launder their money or hide assets. Additional information about the reporting requirements is available at FinCEN.gov/BOI. Subscribe to FinCEN Updates for future guidance documents. FinCEN’s BOI webpage provides:   a Small Entity Compliance Guide; answers to Frequently Asked Questions; a video overview of beneficial ownership information reporting; and more. Reporting companies can file beneficial ownership information electronically through FinCEN’s BOI E-Filing System. DO I NEED TO REPORT? Most businesses in Minnesota are small businesses that may need to file. So will many foreign businesses registered to do business in the U.S. However, there are some exceptions.    The following 23 types of entities are exempt from the new reporting requirement: Inactive entity Securities reporting issuer Governmental authority Bank Credit union Depository institution holding company Money services business Broker or dealer in securities Securities exchange or clearing agency Other Exchange Act registered entity Investment company or investment adviser Venture capital fund adviser Insurance company State-licensed insurance producer Commodity Exchange Act registered entity Accounting firm Public utility Financial market utility Pooled investment vehicle Tax-exempt entity Entity assisting a tax-exempt entity Large operating company Subsidiary of certain exempt entities FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether a company meets an exemption (see Chapter 1.2, “Is my company exempt from the reporting requirements?”). Companies should carefully review the qualifying criteria before concluding that they are exempt.   HOW AND WHEN TO REPORT Reporting companies can report beneficial ownership information electronically through FinCEN’s BOI E-Filing System.  If your company was created or registered before January 1, 2024, you will have until January 1, 2025, to report BOI. If your company is created or registered on or after January 1, 2024, you must report BOI within 90 days of notice of creation or registration. Beginning in 2025, that reporting window is 30 days. Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days. Article by sos.state.mn.us

CTA Imposes New BOI Obligations

Effective January 1, 2024, U.S. and foreign entities doing business in the U.S. may be required to disclose information regarding their beneficial owners to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement is being implemented under the beneficial ownership information (BOI) reporting provisions of the Corporate Transparency Act (CTA) passed by Congress in 2021.  Who is Impacted? Companies are required to report BOI information only when they meet the definition of a “reporting company” and do not qualify for an exemption. A domestic reporting company would generally include a corporation, limited liability company (LLC), and companies created by filing documents with a secretary of state, such as a limited liability partnership, business trust, and other limited partnerships. The term “foreign reporting company” generally includes entities formed under the law of a foreign country that are registered to do business in any U.S. state.   Reporting companies created or registered to do business in the U.S. after January 1, 2024, must file an initial report disclosing the identities and information regarding their beneficial owners within 30 days of creation or registration (FinCEN has recently proposed extending this deadline to 90 days). A beneficial owner is broadly defined as any individual who, directly or indirectly, either exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests of a reporting company. Reporting companies are required to file a BOI report electronically through a secure filing system, FinCEN’s BOI E-Filing System, which began accepting reports on January 1, 2024.   Reporting companies created or registered to do business in the U.S. prior to January 1, 2024, are required to file an initial report by January 1, 2025. Once the initial report is filed, an updated BOI report must be filed within 30 days of a change. The failure to make required BOI filings may result in both civil (monetary) and criminal penalties.  Who is Exempt? There are 23 specific types of entities that are exempt from the new BOI reporting requirement.  Most exemptions apply to entities that are already subject to substantial federal reporting requirements, such as some public companies, banks, securities brokers and dealers, insurance companies, registered investment companies and advisors, and pooled investment companies.  An exemption is also available for a “large operating company,” generally defined as a company with more than 20 full-time employees, a physical office within the U.S., and more than USD 5 million in gross receipts or sales from U.S. sources (as shown on a filed federal income tax or information return).  Practical Challenges Every company doing business in the U.S. will need to determine whether it is subject to BOI reporting or whether an exemption applies. Because many of the exemptions depend on an entity’s legal status under various statutes (e.g., the Securities Exchange Act, the Investment Company Act), coordination and confirmation with counsel may be necessary. Further, companies that are eligible for exemption will need to implement processes to continuously assess eligibility for the exemption.  Companies that are subject to BOI reporting will need to implement processes to identify its beneficial owners and gather the information necessary to file the required BOI report. For some entities, operating agreements, subscription agreements, and similar documents may need to be reviewed to take into account the new BOI disclosure obligations. Further, because the definition of beneficial owners includes not only shareholders but senior officers and important decision-makers within the reporting company, processes to identify changes in leadership or key management will need to be considered to comply with BOI reporting obligations going forward.   Next Steps The new BOI reporting requirements are mandated under Title 31 of the U.S. Code. The new rules include the legal requirements of who must file, exemptions from filing, and the information to be reported. Because the information to be reported on this form arises from determinations that are primarily legal in nature, companies should begin working with their counsel to proactively assess their filing obligations under the new BOI reporting rules. Article by BDO

What startups should know about BOI

As of January 1, 2024, millions of startups and small businesses must file a Beneficial Ownership Information (BOI) Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The reporting requirement was established under the Corporate Transparency Act (CTA) which is intended to prevent corporations, LLCs, and other business entities from concealing the identities of the individuals who ultimately own or control them.  In this article we explore the challenges and considerations for startups in fulfilling BOI reporting requirements. Beneficial ownership information reporting under the CTA Under the CTA, many U.S. business entities are required to report information about their beneficial owners.  A beneficial owner is an individual who directly or indirectly either: Has substantial control over the company, or Owns or controls at least 25% of the ownership interests of the company. The goal of the CTA is to gather additional information regarding the ownership of entities engaging or operating in the U.S. market to combat illicit activities such as money laundering and tax evasion.  The CTA does not apply to all entities. It only applies to an entity that is an LLC, a corporation, or created by the filing of a document with the Secretary of State or similar office. So, for example, a sole proprietorship that was formed merely by the individual going into business and that did not require a filing to create it would not have to file a report. In addition, there are 23 categories of entities that are exempt. Exemption stems from the fact that these entities are already subject to scrutiny by federal or state agencies and, most likely, have already disclosed beneficial ownership information (for example, publicly traded corporations or financial institutions) or because they are less likely to engage in the type of activities the CTA is designed to combat (for example, large operating companies and inactive entities). For LLCs, corporations, and other entities that must comply and file a BOI report (called “reporting companies”), the following deadlines apply: For reporting companies created before January 1, 2024, the initial BOI report must be filed with FinCEN by January 1, 2025.  For reporting companies created in 2024, the initial BOI report must be filed within 90 calendar days of the date it receives notice that its creation is effective For reporting companies created in 2025 and beyond, the initial BOI report must be filed within 30 calendar days of the date it receives notice that its creation is effective. All reporting companies must file an updated BOI report with FinCEN within 30 calendar days of any change in the information reported about the company or its beneficial owners, including any change in who the beneficial owners are. Penalties for noncompliance are significant, including fines and potential criminal charges. For more information, check out: What is the Corporate Transparency Act? CTA basics. Potential CTA challenges for startups There are several challenges that startups must address when complying with BOI reporting requirements: Changing ownership: Startups can encounter a significant challenge with the new BOI reporting requirement due to their continuous fundraising activities. Reporting companies must file an updated BOI report upon any changes with respect to who their beneficial owners are. The frequent changes in business ownership can make BOI reporting almost a regular task, consuming valuable time for business owners and those responsible for their compliance. To stay compliant, startups must vigilantly monitor potential triggering events, which not only include a change in ownership but changes to the information reported about the company, such as a change in name or principal place of business address, or changes to the personal information the company reported about its beneficial owners (such as if they change residential address). Data protection: Startups should consider how they will protect personal information they may be collecting and reporting. The CTA requires companies to provide a beneficial owner’s name, date of birth, home address, and a passport or driver’s license number and a copy of that document. To mitigate risk associated with data protection, a third-party provider could be designated to collect and store this information or the beneficial owner could apply for a FinCEN Identifier, whereby they will provide their personal information directly to FinCEN instead of the company. Defining a beneficial owner based on substantial control: “Substantial control” of a company is defined very broadly.  An individual exercises substantial control if the individual is a senior officer, has the authority to appoint or remove senior officers or a majority of the board of directors or similar governing body, is an important decision maker, or has any other form of substantial control. Substantial control can be exercised directly or indirectly.  An example of indirect control is controlling an intermediate entity that controls the reporting company. Defining a beneficial owner based on 25% ownership: When it comes to the 25% ownership rule, owners and founders must first determine the type of ownership interests in their company and the individuals that hold them.  Then they must calculate the percentage of ownership interests held directly or indirectly by those individuals to determine who owns or controls at least 25%.  To calculate the diluted equity of the startup, a reporting company must take into account the total number of shares that would be outstanding if all derivative instruments (stock options, convertible debt, etc.) were exercised. Because ownership interests can change, it’s important to keep track of the information reported on an initial BOI filing and update it whenever there is a change in who owns or controls at least 25%. Direct or indirect ownership: Similar to substantial control, ownership can be direct or indirect. An individual can have direct or indirect ownership or control of a reporting company through various means, including joint ownership, representation by another individual, involvement in trusts or similar arrangements, or through intermediary entities owning or controlling ownership interests in the reporting company.  For more information, see Who is a beneficial owner under the Corporate Transparency Act?  State disclosure requirements In addition to the federal CTA reporting requirements, certain states are imposing … Read more

How to File a BOI for Your Business

Under the Corporate Transparency Act, U.S. small businesses must file beneficial ownership information reports with the Department of the Treasury. The Corporate Transparency Act (CTA), aimed at combating illicit financial activity, went into effect on January 1, 2024. Under the act, small businesses across the United States need to file beneficial ownership information reports, also known as corporate transparency reports. Here’s everything small business owners need to know about filing a corporate transparency report. [Read More: What Every Small Business Needs to Know About the Corporate Transparency Act] What to know about beneficial ownership information reporting The CTA was developed to increase transparency in business ownership and curtail the use of anonymous shell corporations for tax fraud, money laundering, and other illegal financial activity. Under this act, all businesses that fall under the definition of a reporting company must file a beneficial ownership information report (BOIR) with the Financial Crimes Enforcement Network (FinCEN). A reporting company is any privately held company, whether domestic or foreign, registered to conduct business in the U.S. Publicly traded companies do not fall under the CTA, as they are subject to their own reporting requirements. A beneficial owner is any individual who owns or controls at least 25% of an organization, or directly or indirectly exercises substantial control in any of the following roles: They serve as a senior officer, such as a president, CEO, or general counsel. They have the authority to appoint or remove senior officers, board members, or other similar roles. They make important decisions concerning the company’s business, finances, and/or structure. Reporting requirements for small businesses Eligible small businesses will need to report the following information about their companies: The full legal name of the company. The company’s business address; P.O. boxes or lawyer’s/adviser’s offices cannot be accepted. The state or Tribal jurisdiction where the company was formed or first registered. The taxpayer identification number and an identity document, such as a filed Articles of Incorporation or Organization. Corporate transparency reports must also include the below information about any beneficial owners: Their full legal name and date of birth. Their home address; P.O. boxes or lawyer’s/adviser’s offices cannot be accepted. A photocopy of their U.S. driver’s license or passport. Under this act, all businesses that fall under the definition of a reporting company must file a beneficial ownership information report (BOIR) with the Financial Crimes Enforcement Network (FinCEN). How to file your corporate transparency report As of January 1, 2024, FinCEN has begun accepting beneficial ownership information reports. Here are four steps you can take to prepare your corporate transparency report. 1. Determine whether your business is required to file. Under the CTA, LLCs and corporations must file beneficial ownership information reports unless they qualify for an exemption. The following entities are exempt from reporting: Large operating companies; those with over 20 full-time employees in the U.S. and over $5 million in gross sales or receipts from U.S.-based sources. Inactive entities that were established on or before January 1, 2020, but are not in active business. Non-profits except ones that have their non-profit status pending with the IRS. Any other exemption from CTA reporting. If you aren’t sure if your business falls under other CTA reporting exemptions, speak with a lawyer. Small businesses that are members of the National Small Business Association (NSBA) as of March 1, 2024, the date a federal court ruled in favor of NSBA’s constitutional challenge to CTA. If your company is not an LLC or corporation, establish whether your business falls under the definition of a reporting company as defined above; a legal professional can also help you make this determination. 2. If your business qualifies, learn who the beneficial owners are. List out any individuals who own or control 25% of your company, or otherwise exercise substantial control as defined above. If you are unsure if an individual meets the requirements of a beneficial owner, consult with a legal professional. Once you have identified any beneficial owners, contact each to inform them that the CTA requires your business to report their personal information to FinCEN. Beneficial owners can choose to apply for a FinCEN Identifier and provide information to FinCEN directly. Otherwise, they can send the necessary information directly to you (the company) to be included in your business’s beneficial ownership information report. 3. Create a procedure. Whether your beneficial owners are submitting their information via FinCEN or to your company, establish a process to keep all personal information organized, secure, and current. In addition to your initial report, you will need to file updated reports should there be a change in personal information or beneficial ownership. [Read More: How to Choose the Best Business Entity for Your Small Business] 4. File your report online. All companies required to submit beneficial ownership information reports must file online via FinCEN. You can file one of two ways: Complete and upload a PDF. Download a copy of the blank BOIR form as a PDF here and fill in the information. They can then upload the completed PDF using this page. It should be noted that Adobe Acrobat is required to open and complete this PDF. Use FinCEN’s online platform. If you do not have Adobe Acrobat or simply wish to complete and file your BOIR within FinCEN’s platform, you can visit this page and follow the prompts. You will need to fill in information for and upload a photo of an identification document for each beneficial owner. Reporting companies established before January 1, 2024, have until January 1, 2025, to file their initial corporate transparency reports. Companies established between January 1, 2024, and January 1, 2025, must file within 90 days from the notification or public announcement of their formation, whichever date comes first. Article by US Chamber of Commerce

U.S. BOI Registry Now Accepting Reports

Existing Companies Have One Year to File; New Companies Must File Within 90 Days of Creation or Registration WASHINGTON – Today, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting beneficial ownership information reports. The bipartisan Corporate Transparency Act, enacted in 2021 to curb illicit finance, requires many companies doing business in the United States to report information about the individuals who ultimately own or control them. “The launch of the United States’ beneficial ownership registry marks a historic step forward to protect our economic and national security,” said Secretary of the Treasury Janet L. Yellen. “Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage. Having a centralized database of beneficial ownership information will eliminate critical vulnerabilities in our financial system and allow us to tackle the scourge of illicit finance enabled by opaque corporate structures.” Filing is simple, secure, and free of charge. Companies that are required to comply (“reporting companies”) must file their initial reports by the following deadlines: Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025. Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective. Beneficial ownership information reporting is not an annual requirement. A report only needs to be submitted once, unless the filer needs to update or correct information. Generally, reporting companies must provide four pieces of information about each beneficial owner: name; date of birth; address; and the identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.  The company must also submit certain information about itself, such as its name(s) and address. In addition, reporting companies created on or after January 1, 2024, are required to submit information about the individuals who formed the company (“company applicants”). Article by Fincen.gov

Beneficial Ownership Information Reporting

Frequently Asked Questions FinCEN has prepared the following Frequently Asked Questions (FAQs) in response to inquiries received relating to the Beneficial Ownership Information Reporting Rule. These FAQs are explanatory only and do not supplement or modify any obligations imposed by statute or regulation. Please refer to the Beneficial Ownership Information Reporting Rule, available at www.fincen.gov/boi, for details on specific provisions. FinCEN expects to publish additional guidance in the future. Questions may be submitted on FinCEN’s Contact web page. PDF versions of the FAQs in English and other languages are available here. A. General Questions A. 1. What is beneficial ownership information? A. 2. Why do companies have to report beneficial ownership information to the U.S. Department of the Treasury? A. 3. Under the Corporate Transparency Act, who can access beneficial ownership information? A. 4. How will companies become aware of the BOI reporting requirements? B. Reporting Process B. 1. Should my company report beneficial ownership information now? B. 2. When do I need to report my company’s beneficial ownership information to FinCEN? B. 3. When will FinCEN accept beneficial ownership information reports? B. 4. Will there be a fee for submitting a beneficial ownership information report to FinCEN? B. 5. How will I report my company’s beneficial ownership information? B. 6. Where can I find the form to report? B. 7. Is a reporting company required to use an attorney or a certified public accountant (CPA) to submit beneficial ownership information to FinCEN? B. 8. Who can file a BOI report on behalf of a reporting company, and what information will be collected on filers? C. Reporting Company C. 1. What companies will be required to report beneficial ownership information to FinCEN? C. 2. Are some companies exempt from the reporting requirement? C. 3. Are certain corporate entities, such as statutory trusts, business trusts, or foundations, reporting companies? C. 4. Is a trust considered a reporting company if it registers with a court of law for the purpose of establishing the court’s jurisdiction over any disputes involving the trust? C. 5. Does the activity or revenue of a company determine whether it is a reporting company? C. 6. Is a sole proprietorship a reporting company? C. 7. Can a company created or registered in a U.S. territory be considered a reporting company? D. Beneficial Owner D. 1. Who is a beneficial owner of a reporting company? D. 2. What is substantial control? D. 3. One of the indicators of substantial control is that the individual is an important decision-maker. What are important decisions? D. 4. What is an ownership interest? D. 5. Who qualifies for an exception from the beneficial owner definition? D. 6. Is my accountant or lawyer considered a beneficial owner? D. 7. What information should a reporting company report about a beneficial owner who holds their ownership interests in the reporting company through multiple exempt entities? D. 8. Is an unaffiliated company that provides a service to the reporting company by managing its day-to-day operations, but does not make decisions on important matters, a beneficial owner of the reporting company? D. 9. Is a member of a reporting company’s board of directors always a beneficial owner of the reporting company? D. 10. Is a reporting company’s designated “partnership representative” or “tax matters partner” a beneficial owner? D. 11. What should a reporting company report if its ownership is in dispute? D. 12. Who does a reporting company report as a beneficial owner if a corporate entity owns or controls 25 percent or more of the ownership interests of the reporting company? E. Company Applicant E. 1. Who is a company applicant of a reporting company? E. 2. Which reporting companies are required to report company applicants? E. 3. Is my accountant or lawyer considered a company applicant? E. 4. Can a company applicant be removed from a BOI report if the company applicant no longer has a relationship with the reporting company? E. 5. The company applicants of a reporting company include the individual “primarily responsible for directing the filing of the creation or registration document.” What makes an individual “primarily responsible” for directing such a filing? E. 6. Is a third-party courier or delivery service employee who only delivers documents that create or register a reporting company a company applicant? E. 7. If an individual used an automated incorporation service, such as through a website or online platform, to file the creation or registration document for a reporting company, who is the company applicant? F. Reporting Requirements F. 1. Will a reporting company need to report any other information in addition to information about its beneficial owners? F. 2. What information will a reporting company have to report about itself? F. 3. What information will a reporting company have to report about its beneficial owners? F. 4. What information will a reporting company have to report about its company applicants? F. 5. What are some acceptable forms of identification that will meet the reporting requirement? F. 6. Is there a requirement to annually report beneficial ownership information? F. 7. Does a reporting company have to report information about its parent or subsidiary companies? F. 8. Can a reporting company report a P.O. box as its current address? F. 9. Have I met FinCEN’s BOI reporting obligation if I filed a form or report that provides beneficial ownership information to a state office, a financial institution, or the IRS? F. 10. If a beneficial owner or company applicant’s acceptable identification document does not include a photograph for religious reasons, will FinCEN accept the identification document without the photograph? F. 11. What residential address should be reported if a reporting company is required to a report individual’s residential address, but that an individual does not have a permanent residential residence? G. Initial Report G. 1. When do I have to file an initial beneficial ownership information report with FinCEN? G. 2. Can a parent company file a single BOI report on behalf of its group of companies? G. 3. How … Read more

Court Decision Suspends BOI Reporting for Some, Not All

A recent ruling in a federal district court has changed the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements for some, but not all. It’s important to understand if you are part of the group that no longer needs to file, or if the filing requirements for your business are still valid. Who Does the Recent Beneficial Ownership Information Reporting Court Case Impact? On March 1, 2024, a federal district court in the Northern District of Alabama ruled in National Small Business United v. Yellen that the CTA Act is unconstitutional. The decision states the Department of the Treasury and FinCEN cannot require any of the plaintiffs to comply with the CTA, and along with it, related BOI requirements. Who are the plaintiffs? In addition to Isaac Winkles and any reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association and any of its members as of March 1, 2024, will not have to report BOI at this time. What Does this Court Case Mean for the Future of BOI Reporting? The long-term impact of this ruling on BOI reporting is yet to be determined. For now, the ruling only applies: While the order remains in effect, and  To the named plaintiff as well as the 65,000-plus other members of the National Small Business Association as of March 1, 2024. As the situation unfolds, if your entity does not fall into one of the 23 exemption categories from the CTA or it is not one of the parties affected in this district court case, you may still have a federal BOI reporting requirement. As a reminder, below are the federal reporting deadlines:  DATE COMPANY WAS/IS ESTABLISHED INITIAL BOI REPORT SUBMISSION DEADLINE Prior to Jan. 1, 2024 Jan. 1, 2025 On or after January 1, 2024, and before January 1, 2025 90 days from formation  2025 or later 30 days from formation Additionally, the federal court case does not appear to impact New York’s state BOI reporting requirements, due on the following dates:  DATE OF LLC FORMATION/AUTHORIZATION TO DO BUSINESS IN NY NY BOI/NY STATEMENT OF EXEMPTION DUE DATES On or before December 21, 2024 January 1, 2025 After December 21, 2024 At the time of filing articles of organization or applying for authority to do business in NY We recommend consulting with your legal counsel to determine your entity’s filing requirements under the CTA and to fully understand the impact this court decision has on your business.  Article by Cohen & Co