Beneficial Ownership Information Reporting
Corporate Transparency Act – Beneficial Ownership Information Reporting Requirement
The Corporate Transparency Act (signed into law on January 1, 2021) expanded anti-money laundering laws and created new reporting requirements for certain companies doing business in the US Beginning in 2024, many small businesses are required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) in an effort to create a national database for use by national security and law enforcement agencies to prevent the use of shell companies for criminal activity.
The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.
Below is a summary of various aspects of the CTA for you to conder as you get ready for compliance with this new law.
Reporting Requirements instituted as of January 1, 2024.
The federal government and the Financial Crimes Enforcement Network (FinCEN) has established a new reporting requirement that may require you and/or your business to report Beneficial Ownership Information (BOI) to FinCEN.
More information can be found at: https://www.fincen.gov/boi
Who needs to report:
U.S. companies that are a C or S corporation or an LLC (including single member LLCs that report their income and expense on their personal returns as a Schedule C business). There are exemptions for some businesses. These are usually businesses that have other information filing requirements such as banks, securities dealers and large operating companies.
When will reporting begin:
The BOI reporting website opened 01/01/2024 and can be found at: https://www.fincen.gov/boi
Existing companies have until December 31, 2024 to file their initial report
New companies created or formed between 01/01/2024 and 12/31/2024 will have 90 days from the effective date of their incorporation or organization. Starting in 2025 the timeframe drops to 30 days.
Who/what needs to be reported:
In addition to the company information including name, address and federal ID number, the reporting company also needs to report all:
- Beneficial Owners – who are individuals that own or control 25% or more of the ownership interests of a reporting company and/or have “substantial control” over a company such as a Senior Officer who directs operations of the company.
- Company Applicant – this is someone who directly files or is primarily responsible for the filing of the document that creates or registers the company such as an attorney or registered agent.
- Each individual must supply their full legal name, date of birth, complete physical address (not a P.O. Box) and a unique identifying number and issuing jurisdiction. Identification documents can be an unexpired driver’s license, passport or state ID. A copy of the documents must be uploaded to the site.
Changes or Inaccuracies:
- Inaccuracy: If an inaccuracy is found on the initial report, the company has 90 days to file an updated report in 2024 and within 30 days starting in 2025.
- Changes: If any of the information changes, the company has 30 days to file an updated report.
What happens if I don’t file:
- Penalties for willfully not filing a BOI report are $591 per day and/or
- Imprisonment for up to two years and/or a fine of up to $10,000
Compliance
TDHCD has made the decision we will not be assisting our clients with compliance with the Corporate Transparency Act (“CTA”), including beneficial ownership information (“BOI”) reporting. Our clients have sole responsibility for compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. TDHCD shall have no liability resulting from any failure of our clients to comply with CTA. Information regarding the BOI reporting requirements can be found at https://www.fincen.gov/boi.
Consider consulting with any of the following resources if you have questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership information and ultimate reporting compliance.
- Evon M. Spangler – Attorney with Spangler and de Stefano, PLLP located in St. Paul
- E-mail – evon@spangleranddestefano.com
- Phone number – 651-776-2900
- Daniel R. Haller – Attorney with Felhaber Larson located in Minneapolis
- E-mail – Dhaller@felharber.com
- Phone number – 612-373-8539
- Leonard B. Segal – Attorney with Segal Duffek Moen located in Minneapolis
- E-mail – lsegal@sdmlawyers.com
- Phone number – 952-358-7408
- Alex W. Johnson – Attorney with DeWitt located in Minneapolis
- E-mail – awj@dewittllp.com
- Phone number – 612-305-1434
- Option of self-reporting through the FINCEN website
- Link to frequently asked questions page is https://www.fincen.gov/boi-faqs
Legal disclaimer – The service providers listed are independent and not affiliated with our firm. We do not endorse these providers and recommend conducting your own due diligence. Our firm is not liable for the actions or services of these providers, and we receive no financial incentives as a result of using any of the above service providers.