The Corporate Transparency Act (CTA) aims to prevent U.S. companies from engaging in certain illegal activities. This includes money laundering and tax fraud. By implementing federal disclosure procedures, identifying bad actors will be easier. Therefore, as of January 1, 2024, the U.S. Department of the Treasury mandates that registered companies submit Beneficial Ownership Information. This includes U.S. companies and foreign entities doing business in the US. Non-compliance with these filing obligations could result in severe fines or even imprisonment. Greenlight Financial can help your business prepare for compliance.
SPEAK TO AN EXPERTFrequently Asked Questions on the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) Reports. These FAQs provide a preliminary understanding of the new requirements, responsibilities, and implications of the CTA.
Please note: This information is subject to change as new updates and clarifications come out regarding the CTA and BOI Reports.
The Corporate Transparency Act (CTA) is a part of the National Defense Authorization Act and was signed into law on January 1, 2021. The objective of this new law aims to enhance transparency. It mandates specific business entities to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), an agency within the U.S. Department of the Treasury.
The primary role of the CTA is to counteract money laundering, terrorist financing, and other illicit activities by eliminating the possibility of individuals anonymously controlling or benefiting financially from U.S. companies. The act applies to various entities, including corporations, limited liability companies (LLCs), and other similar entities established under state laws or foreign entities authorized to conduct business in the United States.
Beneficial Ownership Information pertains to the identification of individuals who have direct or indirect ownership or control over a company.
A beneficial owner is an individual who, either directly or indirectly, fulfills one of the following criteria: (1) holds significant control over the reporting company, or (2) possesses or controls a minimum of 25% of the reporting company’s ownership interests.
An ownership interest typically refers to an agreement that defines ownership rights within the reporting company. For example, ownership interests include those who possess equity shares, stocks, voting rights, or any other system employed to prove ownership.
FinCen actively engages in outreach through various methods to reach reporting companies throughout the U.S. However, if your business currently works with an accountant or attorney on a regular basis, they likely have informed you of this new requirement.
In our case, we sent out an email with information about the CTA to all of our clients.
To learn more, see the Beneficial Ownership Information (BOI) reporting requirements provided on FinCEN’s BOI webpage at www.fincen.gov/boi.
“Reporting Companies” refers to a company that is required to report.
Required companies include: Domestic reporting companies that are corporations, limited liability companies, or any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
Foreign reporting companies (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
No, unless a sole proprietorship was created (or, if a foreign sole proprietorship, registered to do business) in the United States by filing a document with a secretary of state or similar office. An entity is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing such a document. Filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.
Yes. There are 23 entity types that are exempt from reporting. Exempt entities include:
Reporting on Beneficial Ownership Information (BOI) starts on January 1, 2024.
If you created or registered your qualifying company before January 1, 2024, you have until January 1, 2025, to file an initial BOI report.
A qualifying company that was created or registered in 2024 will have 90 calendar days to file their BOI report upon receiving the actual or public notice of effective registration.
Companies created on or after January 1, 2025 will have 30 calendar days to file their BOI report upon receiving the actual or public notice of effective registration.
The BOI E-Filing website for reporting beneficial ownership information went live on January 1, 2024 at https://www.fincen.gov/.
Your company’s report should include:
Its legal name;
Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters); Its jurisdiction of formation or registration; and its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).
Additionally, you will have to indicate whether this is an initial report, a correction or an update of a prior report.
Each beneficial owner of a reporting company will have to report:
The individual’s name;
Date of birth;
Residential address; and
An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document; this will include an image of the identification document used to obtain the identifying number.
Any current beneficial owner’s residential address must be reported. If there are any changes, they should be reported within 30 calendar days of a change.
Acceptable forms of identification include a U.S. driver’s license (including any driver’s licenses issued by a commonwealth, territory, or possession of the United States).
An identification document issued by a U.S. state or local government, or Indian Tribe;
A passport issued by the U.S. government; or a passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).
These are the only acceptable documents and they must be current (non-expired).
Reporting additional information on beneficial owners is required based on when the company was created or registered.
Companies created or registered on or after January 1, 2024 will need to report information about itself, its beneficial owners plus its company applicants.
Any company created or registered before January 1, 2024, do not need to provide information about its company applicants.
Yes. Greenlight Financial currently provides this service and can file your reporting company’s information on your behalf. Click the button to get started.
There is no requirement to report BOI annually. An initial report must be filed and corrections and updates must be made as needed.
FinCen can impose civil or criminal penalties on reporting companies that ignore this requirement. If you need to correct a mistake or update information on your report, it is encouraged to do so within 90 days of the deadline to avoid these penalties.
Yes, you are required to provide accurate information on your reporting company and its beneficial owners regardless of where you obtained the information about the CTA and BOI reports.
If you need assistance in obtaining a Taxpayer Identification Number (TIN), contact us today to get started. You can call us at 305-860-5970 or email us at info@greenlightfinancial.net
Yes. Companies created or registered in a U.S. territory by filing a document with the territory’s Secretary of State or similar office and do not qualify for an exemption, are required to report their BOI. U.S. territories are the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the U.S. Virgin Islands.
A reporting company must disclose individuals who indirectly either (1) wield substantial control over the reporting company or (2) possess or control a minimum of 25 percent of ownership interests in the reporting company through a corporate entity. The disclosure should exclude the corporate entity functioning as an intermediary for these individuals.
Instead of reporting an individual beneficial owner, who exclusively owns or controls ownership interests in the reporting company through an exempt entity or entities, the reporting company may report the name(s) of the exempt entity or entities.
If the beneficial owners of both the reporting company and the intermediate entity are the same individuals, the reporting company has the option to report the FinCEN identifier and full legal name of the intermediate company through which an individual acts as a beneficial owner of the reporting company.
Alert your third-party provider that you used to submit your BOI report of any changes as soon as possible so they can update or file a new report.
If you submitted your BOI report through Greenlight Financial there is a $25 fee per change.
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