New Corporate Transparency Act Reporting Coming Soon

On September 29, 2022, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of Treasury, issued its final rule (the “Rule”) implementing the beneficial ownership information (“BOI”) reporting requirements of the Financial Corporate Transparency Act (the “Act”) that will affect millions of privately owned companies.

The Act was enacted with the aim of enhancing financial transparency and preventing illicit activities, such as money laundering and terrorism financing, by requiring certain companies (each a “Reporting Company”) to disclose accurate and up-to-date beneficial ownership information to FinCEN. The Act will affect a broad range of entities including, but not limited to:

• Entities that own real estate assets;
• Investment vehicles set up by individuals; and
• Smaller private companies and joint ventures.

Under the Act, Reporting Companies that do not qualify for an exemption will be required to file a BOI report that includes certain required information about their Beneficial Owners. 

Here are some quick answers to some key questions relating to the Corporate Transparency Act:

About Whom must a Reporting Company report?

• Beneficial Owners and Company Applicants.

Who is a Beneficial Owner?

• Individuals that own or control at least 25% of a company’s ownership interest -or- have substantial control over its operations.

Who is a Company Applicant?

• A person that files documents to form your entity or directs the filing of those documents.

What information must be provided about the Beneficial Owners?

• A BOI Report requires the full legal name, date of birth, residential street address, and an identifying number (such as driver’s license or passport with a copy of the applicable document), or a FinCEN Number of each Beneficial Owner.

How do I make these BOI reports?

• FinCEN will establish an online portal that Reporting Companies will use to electronically file any BOI reports.

When do I have to make these reports?

• For Reporting Companies created on or after January 1, 2024, BOI reports will be due within 30 days[1] of formation (for U.S. entities) or registration (for non-U.S. entities). For Reporting Companies formed before January 1, 2024, their initial BOI report is due no later than January 1, 2025. 

What Companies are exempt from reporting?

• Companies that are already subject to substantial federal reporting requirements (i.e., public companies, banks, insurance companies, etc.), operating companies in the U.S. with 20 or more full time employees having filed a federal tax return for the previous year showing US$5 million in gross income from US sources, and completely inactive companies.

What are the penalties if I fail to timely report?

• Failure to comply with the reporting requirements or providing false information can lead to criminal fines of up to $10,000 and/or up to two years imprisonment. Civil penalties include a fine of $500 per each day of non-compliance.

How can companies prepare?

• FinCEN recently released a Small Entity Compliance Guide. We recommend that you keep a close eye on further developments related to the Corporate Transparency Act, as additional guidance and regulations are expected to be issued in the coming months. You can access additional information on the FinCEN BOI website. It’s important to consult legal and financial professionals to understand how the Act specifically impacts your business.

BoyarMiller is committed to assisting you in navigating this new regulatory environment. If you have any immediate questions or concerns, please do not hesitate to reach out to our dedicated team at 713.850.7766 or visit our website at boyarmiller.com.

[1] FinCEN issued a Notice of Proposed Rulemaking (NPRM) to extend the deadline from 30 calendar days to 90 calendar days for entities created or registered in 2024.  The public comment period closes 10/30/23.