The Corporate Transparency Act (CTA) was enacted as part of the National Defense Act for Fiscal Year 2021. The CTA mandates that millions of entities report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). The entire CTA is voluminous and replete with complexity. This client alert is ONLY meant to provide a preliminary overview of the provisions in the CTA and to inform you of potential LEGAL reporting obligations.
Who is required to report under the CTA’s BOI reporting requirement?
All domestic and foreign entities that have filed formation or registration documents with a U.S. state (or Indian tribe). There are 23 exemptions available such as:
EXEMPT: Large operating entities that meet ALL the following criteria:
1. Employ more than 20 people in the U.S.
2. Had gross revenue (or sales) over $5 million on the prior year’s tax return
3. Has a physical office in the U.S.
EXEMPT: Publicly traded companies that have registered under Section 102 of SOX
Visit https://www.fincen.gov/boi-faqs#C_2 for the full list of exemptions.
When must companies file?
New entities (created/registered after Dec. 31 , 2023) – must file within 30 days
Existing entities (created/ registered before Jan. 1, 2024) – must file by Jan. 1, 2025
Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports – must file within 30 days.
What information do companies need to report?
1. Each company must report the information below.
2. Full legal name of the reporting company and any trade or OBA names
3. Business address
4. State or Tribal jurisdiction of formation or registration
5. IRS TIN
In addition, each reporting company must report the following details on its beneficial owners and, for newly created entities, its company applicant(s):
1. Name
2. Birthdate
3. Address
4. Unique identifying number and issuing jurisdiction from an acceptable identification document (and image of such document)
What are the taxpayer penalties for noncompliance with the statute?
1. Civil penalties are up to $500 per day that a violation continues.
2. Criminal penalties include a $10,000 fine and/or up to two years of imprisonment.
For more information:
Visit: https://www.fincen.gov/boi
Nichols, Cauley is a CPA firm authorized to practice public accounting. The preparation or assistance in the preparation of CTA forms or required filings currently does not fall under the allowable practices of public accounting firms. Many of our clients will have reporting obligations under the law. Please consult your attorney for further guidance on your compliance requirements