The new Beneficial Ownership Reporting (BOI) requirement put into effect by the Corporate Transparency Act is applicable for all legal entities formed in the United States or non-U.S. entities registered to do business with a state government. Each legal entity formed in the United States before January 1, 2024, must report their beneficial ownership to the Financial Crimes Enforcement Network (FinCen) by January 1, 2025, unless specifically exempted. There are 23 exemptions that may apply, where reporting may not be required. Specific exemptions apply to various business types that are already heavily regulated by the government. Those exemptions include publicly traded companies, banks and credit unions, securities brokers and dealers, public accounting firms, and tax-exempt entities, amongst others. Also exempt are “large operating entities” that employ more than 20 people in the U.S., have reported gross revenue of over $5M on the prior year’s tax return and are physically present in the U.S.
The new requirement is part of the Bank Secrecy Act, a set of federal laws with the intent to help U.S. law enforcement combat money laundering, the financing of terrorism and other illicit activity. It requires the disclosure of “Beneficial Ownership Information” for certain business entities and their owners or persons with control over the business. It is anticipated that over 32 million businesses will be required to comply with this new reporting requirement related to corporate governance. The information that will need to be reported includes the full legal name of the reporting company and any trade or DBA names, business address, state of formation or registration, and taxpayer identification number. In addition, each reporting company must report for its beneficial owners, including their name, birthdate, address and submit an acceptable form of identification, such as a driver’s license or passport. A beneficial owner is defined as any individual who owns at least 25 percent of the reporting company or exercises substantial control over the reporting company, such as a President or CEO.
We strongly recommend that you contact your attorney to assist with determining your filing requirements, if any, and to assist with timely compliance.
Please note that TSA can only assist with completion of the forms, and we are unable to provide analysis as to whether your entity meets an exemption or whether an officer or key decision maker of the company should be listed as a beneficial owner. These additional services may be viewed as providing legal advice, which we cannot provide as CPAs.
There are only a few short weeks left in 2024 to make sure that you are compliant. Penalties for willful failure to comply with the BOI reporting requirement can result in criminal and civil penalties of $500 per day up to $10,000, with up to two years of jail time.
