What is BOI and where did it come from?
The Corporate Transparency Act (CTA), enacted in September 2022, stands as a landmark piece of legislation poised to revolutionize corporate transparency and combat financial crimes. The CTA created a new reporting requirement for businesses, in an effort to clearly identify the owners of corporate entities. This reporting requirement is known as the BOI, and we’ll explore that here. This new 2024 business filing requirement comes with huge penalties.
Key provisions of the CTA:
The Corporate Transparency Act introduces a set of comprehensive provisions aimed at enhancing transparency in corporate ownership. One of its pivotal components is the mandate for companies to disclose Beneficial Ownership Information (BOI). Unlike legal ownership, which represents the individuals with official control, beneficial ownership goes deeper. It works to uncover the true individuals who benefit from and control a company.
Who needs to comply?
The scope of compliance under the CTA extends to various entities, including corporations, limited liability companies (LLCs), and similar structures. Understanding whether your business falls within the ambit of this regulation is crucial for navigating the new landscape of corporate transparency. There are 23 exemptions to the filing requirement, including exemptions for Non-Profits, Banks and Corporations with more than 20 employees or 5 million in gross revenue.
For a full list of exemptions or additional information, check out this link to the Fincen website.
Beneficial Ownership Reporting Requirements:
Companies subject to the CTA are required to report specific details about their beneficial owners. This may include names, addresses, dates of birth, and other identifying information. By shining a light on the individuals who ultimately control a company, the CTA aims to curb the misuse of anonymous shell companies for illicit activities.
Deadlines to file:
If you are a new business after 1/1/2024, you have 30 days to file this report with Fincen.gov. Existing businesses that are required to file this form, have one year to become compliant. If you have changes to the company information or owners, you have 30 days to file the updated information.
What are the penalties?
This new 2024 business filing requirement comes with huge penalties. The penalties for not timely reporting is $500 a day, with a maximum penalty of $10,000. Additionally, there is also the potential of up to two years of jail time.
When, where and how?
To file this BOI report, this will be done through fincen.gov. The form and system is not available yet, the anticipation is the website will be available starting 1/1/24. You can file this report yourself or engage a professional to make sure you are compliant.
Contact us to schedule a consult after 4/15/2024 and we will be happy to assist you!
