Avoid Major Penalties: Corporate Transparency Act Reporting Requirements

As we move further into 2024, it is critical to remember the ongoing requirements under the Corporate Transparency Act (CTA). This legislation mandates that nearly all U.S. companies must file a Beneficial Owner Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury.

Why This Matters:

Failure to file your BOI report on time can result in substantial penalties. Companies that miss the reporting deadline may face fines of up to $500 per day, potentially reaching a maximum of $10,000. Additionally, the CTA allows for criminal penalties, including fines of up to $250,000 and imprisonment for up to five years.

What You Need to Do:

Identify if Your Company Must Comply: Almost all entities are subject to these reporting requirements, including any domestic or foreign privately held entity created or registered to do business in a state. Exceptions include publicly traded companies, tax-exempt entities, insurance agencies, and certain "large operating companies."

Understand the Required Information: You must report identifying details for all beneficial owners. This includes individuals who, directly or indirectly, exercise substantial control over or own 25% or more of the company's interests. Information required includes the owner's name, date of birth, home address, unique identifying number (such as a passport or driver’s license number), and an image of the identification document.

Meet the Reporting Deadlines: New entities must file within 30 days of creation or registration. Existing entities have until January 1, 2025, to make their initial filing. Updates or corrections to the information must be filed within 30 days of any changes or discovery of incorrect information.

Avoiding Penalties:

To ensure compliance and avoid penalties, we strongly recommend setting up internal systems to track compliance and triggers for filing. Schedule a meeting with your legal team to discuss drafting and implementing your compliance plan.

For detailed guidance, please refer to the Department of Treasury’s BOI home page.

We are here to assist you through this process. If you have any questions or need help understanding your specific obligations, please contact us today.

The information provided in this article is for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by virtue of this article. For specific legal advice related to your situation, please consult with a qualified attorney.