Mandatory Filing Alert: Corporate Transparency Act Requirements

January 10, 2024 by

Does The New Corporate Transparency Act Impact You? - Davis MilesThe Corporate Transparency Act (the “Act”) goes into effect on January 1, 2024, and was enacted by Congress in an effort to (1) increase transparency into the beneficial ownership of domestic and certain foreign businesses, and (2) help prevent money laundering, fraud, hiding ill-gotten gains in shell companies, and other similar criminal activities. The Act requires all companies that do not fall into an exemption to report beneficial ownership of the company to the Financial Crimes Enforcement Network (“FinCen”).

Who must file:

Most companies! Whether your company is registered with the Secretary of State (regardless of if you are a domestic or foreign entity), you must file a Beneficial Ownership Information Report (“BOIR”) with FinCen unless you fall into an exemption.

Whether your company is registered with the Secretary of State (regardless of if you are a domestic or foreign entity), you must file a Beneficial Ownership Information Report (“BOIR”) with FinCen unless you fall into an exemption.
There are 23 exemptions currently and most of these exemptions cover entities that are either highly regulated or large enough to be known already by the US Government – banking entities, government authorities, securities or investment brokers, insurance companies, accounting firms, utility companies, tax exempt entities, inactive entities (there is a long list of requirements to satisfy in order to qualify as inactive), or large operating companies (20+ full time employees, physical presence in the US, and $5M in sales in the past year reported on a tax return). There are other companies that are also exempt, but the above captures the vast majority of exempt companies. If you do not fall into one of these exempt categories, you must file a BOIR.

When to file:

Companies that were in existence prior to 01/01/2024 must file a BOIR with FinCen not later than 12/31/2024.

Companies that are created in 2024 have ninety (90) days following their date of formation to file their BOIR.

Companies that are created in 2025 and beyond have thirty (30) days following their date of formation to file their BOIR.

In addition, if anything changes in the beneficial ownership of the company or other information reported in your initial BOIR, an updated BOIR should be filed within thirty (30) days of the change.

How to file:

You can submit your BOIR either online using web forms or you can download a PDF and upload it once all information has been gathered. Both are available through the BOIR filing website: https://boiefiling.FinCen.gov/fileboir

You will need: (1) Company information: the legal name of the entity, the state of formation, the tax id, any DBAs, and the current business address, (2) Company Applicant information: the FinCen ID or personal information of the individual that filled out and filed the formation documents for your business with the Secretary of State if your business was formed after 1/1/24, and (3) Beneficial Owner information: the FinCen ID or personal information of each of the the beneficial owners of the business.

What is a beneficial owner?

A beneficial owner is each person that exercises substantial control over the company or owns at least 25% of the company’s ownership interests. A person exercises substantial control if he or she is a senior officer, has authority to appoint or remove officers or directors, is an important decision maker, or has any other substantial control over the company.

Want to make the process easier?

Knowing the FinCen ID for the Company Applicant and each Beneficial Owner makes the reporting process much easier. Ask each Company Applicant and each Beneficial Owner to apply for a FinCen ID before you file your BOIR. The process is quick and easy and a FinCen ID is provided instantly upon completion of the FinCen ID request process. Once this FinCen ID is received, this can be used as a unique identification method for an individual instead of reporting their personal information. To apply for your FinCen ID, simply click on the following link https://FinCenid.FinCen.gov/landing, sign in with your Login.Gov account (or create one), and insert your name, date of birth, address, and a copy of your government id into the appropriate fields to receive your FinCen ID.

Do not hesitate to reach out if you have questions about the Beneficial Ownership Information Report process, the Corporate Transparency Act, or if we can help you in any way!

Joshua Mahaffey
jmahaffey@brownfoxlaw.com

Joshua Mahaffey brings a wealth of real-world, corporate experience to his client engagements. Prior to practicing law Mr. Mahaffey spent over twenty years in the transportation and logistics industry, with an emphasis on risk management. He often engaged and collaborated…Read More

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Adam Fox
adam@brownfoxlaw.com

Adam Fox co-founded Brown Fox and has emerged as a go-to confidant and wise counsel for business leadership, ranging from billion dollar companies to innovative start-ups.

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