Get Ready for the Corporate Transparency Act

Own a Business or Have a Beneficial Ownership in One?

Get Ready for the Corporate Transparency Act

The Corporate Transparency Act (CTA) took effect on January 1, 2024, imposing a new federal filing requirement for most corporations, limited liability companies (LLCs), and other business entities.

Congress enacted the CTA in 2021 to combat money laundering and other financial crimes by bad actors using shell companies or opaque ownership arrangements.

Corporations, LLCs, and other entities subject to the CTA are called “reporting companies.” People who form new reporting companies during 2024 must file a beneficial ownership information (BOI) report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) within 90 days of forming the company.

Owners of companies created before 2024 must also file a BOI report, but you have until January 1, 2025 (but think December 31, 2024).

Some businesses are exempt from filing—for example, large operating companies (which the CTA defines as those with over 20 employees and $5 million in income), and companies already federally regulated (such as banks). Other narrower exemptions exist, but the CTA applies to for-profit and non-profit entities.

The BOI report must contain the name, birth date, address, ID number, and an image of that ID for each “beneficial owner” of the reporting company. These are the human beings who (1) own or control at least 25 percent of the company or (2) exercise ‘substantial control’ over the company.

The BOI report is filed online at a new federal database called BOSS (an acronym for Beneficial Ownership Secure System). There is no filing fee.

Government law enforcement and security agencies will use the data from BOI reports to help combat money laundering, tax evasion, terrorism, and other crimes. It will not be available to the public. Information can be found, and reports filed through the FinCEN website: www.fincen.gov/boi

Common questions about the BOI report filing requirements:

· Do you have to file a BOI report if you own a single rental property in an LLC? (Yes)

· Must you file 10 BOI reports if you own 10 LLCs? (Yes)

· Are registered agents responsible for filing the BOI report? (No)

· Do the self-employed have to file? (No)

· Do I need to list a street address in the BOI report? (Yes)

· Do I need to list my Social Security number in the BOI report? (No)

· Must I file an updated BOI report if a beneficial owner leaves the company? (Yes)

Thanks to our friends at Bradford Tax Institute for sharing content on this topic.

Keats Group LLC is not a law firm and does not provide legal advice, including advice on whether any specific entity will be required to file a report. Consult your legal advisor or tax preparer for advice on CTA reporting.