The Corporate Transparency Act (the “Act”) came into effect on January 1, 2024, and imposes new federal reporting requirements on many businesses operating in the U.S. to disclose certain information about their beneficial owners and individuals who file corporate paperwork on the companies’ behalf.
The purpose of this summary is to provide a comprehensive overview of: (1) the general requirements of the Act; (2) who is required to file under the Act; (3) what information needs to be reported; (4) important deadlines under the Act; and (5) what resources are available to file the information required by the Act.
Who is Required to File a BOI Report?
Entities required to report to FinCEN (each a “Reporting Company”) include corporations, limited liability companies (“LLCs”), and other entities that were created by a filing with the Secretary of State, and that do not fall within any of the 23 exempt categories outlined by FinCEN (the list of all exempt categories is available at https://www.fincen.gov/boi-faqs). Noteworthy categories of companies exempt from filing a BOI Report include:
- Large operating companies
- Public companies
- Inactive companies and investment advisers
- Investment companies
- Pooled investment vehicles
- Insurance companies and insurance producers
- Certain “highly regulated” entities, such as banks and credit unions
- Public accounting firms; and
- Tax exempt entities
What Information Is Needed to Complete the BOI Report?
When completing the BOI Report, the following information regarding the Reporting Company, its benefical owners, and company applicant must be reported to FinCEN:
For the Reporting Company:
- Full legal name of entity
- Any trade and “doing business as” names
- Address of principal place of business
- State, tribal, or foreign jurisdiction of formation
- IRS taxpayer identification number
For Beneficial Owners and Company Applicants:
Option 1:
- Full legal name
- Date of birth
- Residential street addresses of beneficial owners; business street addresses of company applicants as of date the report is delivered
- Identification number from US passport, driver’s license, state or local identification document, or foreign passport
- Copy of document from which identification number is used
- Beneficial owners exclude the following:
- Minors
- Any individual acting as a nominee, intermediary, custodian or agent on behalf of another individual
- Certain employees who are not senior officers
- Heirs
- Certain creditors of a reporting company
Option 2:
Alternatively, any Beneficial Owner or Company Applicant can obtain a FinCEN ID at https://fincenid.fincen.gov/landing. A FinCEN ID is a unique 12-digit number that eliminates the need for individuals to share their personal information with the reporting entities. Further, if you are an owner of multiple business entities that require a BOI Report to be filed, having the ability to simply enter your FinCEN ID will streamline the reporting process. All the information contained in Option 1 above will be required to obtain the FinCEN ID. If any information changes (i.e. you move to a new home), only your FinCEN ID would need to be updated, rather than an amended report being filed for the business. We strongly recommend that all beneficial owners register with FinCEN and obtain a FinCEN ID.
When Must the BOI Report be Filed?
Each Reporting Company must take steps to ensure compliance with the Act and file the relevant BOI Report with FinCEN within the following time frames:
- For Reporting Companies in existence before January 1, 2024, on or before January 1, 2025;
- For Reporting Companies created on or after January 1, 2024, but before December 31, 2024, within 90 calendar days of the earlier of the date receiving actual or public notice that its creation has become effective;
- For Reporting Companies created on or after January 1, 2025, within 30 calendar days of the earlier of the date receiving actual or public notice that is creation has become effective;
Please note, the above filing deadlines may change pending the outcome of proposed legislation which, if passed by the U.S. Senate, would: (i) extend the filing date to January 1, 2026, for those Reporting Companies in existence on or before January 1, 2024; and (ii) provide a 90-calendar day filing deadline for Reporting Companies formed on or after January 1, 2025.
Where to File the BOI Report?
In the event your company is a Reporting Company, the BOI Report must be filed electronically through FinCEN’s secure online filing system available at https://boiefiling.fincen.gov/fileboir. The information contained in each BOI Report will be stored in a non-public, secure, centralized database (the “Beneficial Ownership Secure System” or “BOSS”), accessible only by federal agencies and law enforcement.
When Must the BOI Report be Updated?
For all Reporting Companies, the BOI Report must be updated within 30-days of changes in either the beneficial ownership of the Reporting Company, or of the information about those beneficial owners (e.g. address, name, etc.). Notwithstanding, please note the aforementioned 30-day filing deadline may be extended to 90 days pending the passage of proposed legislation currently under review by the U.S. Senate.
Who is Responsible for Filing the BOI Report?
The Reporting Company has the ultimate responsibility for filing the BOI Report. This obligation rests with the officer(s) and managing member(s) responsible for managing the day-to-day operations of the business.
Please Note: The obligation to assist and/or file any report with FinCEN including, but not limited to, the initial BOI Report, is not included within the scope of any existing engagement with Bagley & Rhody, P.C., and all clients remain responsible for the timely and accurately filing all such reports unless agreed to in writing in a supplementary engagement letter with Bagley & Rhody, P.C. (as discussed in greater detail below).
How Can Bagley & Rhody, P.C. Help?
Bagley & Rhody, P.C. is available to provide assistance with the filing of any initial BOI Report following execution of a supplementary engagement letter outlining the specific services to be provided which shall include:
(1) reviewing the current ownership structure of an entity to determine if such entity is a Reporting Company for purposes of the Act
(2) determining the beneficial owners and company applicants to be reported on the initial BOI Report
(3) coordinating the filing of the initial BOI Report with FinCEN.
In the event you would like for Bagley & Rhody, P.C. to assist with the filing of an initial BOI Report for a Reporting Company, please complete our Corporate Transparency Intake Form and a member of our team will be in touch shortly to discuss next steps. Otherwise, please do not hesitate to call our office at 410-573-1626 and request to speak with attorneys from our corporate department – namely Jon Watson and Alec Loyd – or alternatively email CTA@bagleyrhody.com should you have any questions or comments.
