New rules require many businesses to file a one-time report with the Financial Crimes Enforcement Network

The bipartisan Corporate Transparency Act (CTA) enacted in 2021 was designed to protect economic and national security by reducing corporate anonymity that enables money laundering, drug trafficking, terrorism and corruption. Rules issued under the CTA that went into effect January 1, 2024, require most U.S. entities and foreign entities registered to do business in the U.S. to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). Below, we detail who needs to report and how.

What entities are required to report?

According to FinCEN, a reporting company is:

“(1) any corporation, limited liability company, or other similar entity that was created in the United States by the filing of a document with a secretary of state or similar office (in which case it is a domestic reporting company), or any legal entity that has been registered to do business in the United States by the filing of a document with a secretary of state or similar office (in which case it is a foreign reporting company), that (2) does not qualify for any of the exemptions provided under the Corporate Transparency Act.”

This means that if you have an LLC, an S-Corp or a C-Corp, you need file a BOI report. Some types of companies are exempt; see the list of 23 exempted entitles here (under section C.2.).

What gets reported and how often

A BOI report only needs to be filed once.

For each beneficial owner, these four pieces of information are required:

• Name
• Date of birth
• Address
• The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport or a non-expired identification document issued by a State (including a U.S. territory or possession), local government or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.

Beware of scams

FinCEN reports that scammers have been soliciting information and money from individuals and entities that may be subject to reporting under the Corporate Transparency Act.

When filing your report be aware that:

• There is no fee to file a BOI report directly with FinCEN.
• FinCEN does not send correspondence by email or USPS requesting recipients to click on a URL or QR code.
• Correspondence citing a “Form 4022” is fraudulent. FinCEN does not have a Form 4022.
• There is no “U.S. Business Regulations Department.” Any correspondence or documents using this name is fraudulent.

When must BOI reports be filed?

The deadline for reporting depends on when your business was formed:

• Entities formed before January 1, 2024, have until January 1, 2025, to file a BOI report.
• Entities formed in 2024 must file within 90 days of formation.
• Entities formed on or after January 1, 2025, have 30 days to file.

What if you don’t file a timely report

Failure to report complete or updated beneficial ownership information to FinCEN could result in civil or criminal penalties.

Civil penalties are $500 for each day the violation continues. Criminal penalties include imprisonment for up to two years and/or a fine of up to $10,000. Furthermore, senior officers of an entity that fails to file a required report may be held accountable.

Where to file

FinCEN has an online e-filing system at: https://www.fincen.gov/boi. To ensure you’re on the correct site, look for .gov in the URL and the locked padlock icon in your browser’s internet address bar.

To learn more, visit FinCEN’s Frequently Asked Questions page.

 

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