Effective January 1, 2024, the Corporate Transparency Act (CTA) goes into effect for existing businesses and imposes a brand-new federal filing requirement on most corporations, limited liability companies, and limited partnerships and on certain other business entities. The applicable filing is done online at www.fincen.gov/boi.

No later than December 31, 2024, all non-exempt business entities must file a beneficial owner information report (BOI report) with the Financial Crimes Enforcement Network (FinCEN)—the Treasury Department’s financial intelligence unit.

These BOI reports must disclose the identities and provide contact information for all of the entity’s “beneficial owners”: the humans who either (1) control 25 percent of the ownership interests in the entity or (2) exercise substantial control over the entity.

Your BOI report must contain all the following information for each beneficial owner:

• Full legal name
• Date of birth
• Complete current residential street address
• A unique identifying number from either a current U.S. passport, state or local ID document, or driver’s license or, if the individual has none of those, a foreign passport
• An image of the document from which the unique identifying number was obtained

Your BOI report must also provide information about up to 2 company applicants. A company applicant is the individual who actually filed the business entity’s organizing document with the secretary of state. For example, in Florida, the organizing document is filed with the Division of Corporations (www.sunbiz.org). The first applicant is always the individual who electronically or physically filed the articles of organization or incorporation with the secretary of state. The second applicant, if applicable, could be the individual primarily responsible for directing or controlling the filing of the articles. The information provided on the company applicants includes the same information as for the beneficial owners, except you need not provide a residential street address, a business address is sufficient.

1 31 CFR Section 1010.380(b)(1)(ii).

FinCEN will create a new database called BOSS (Beneficial Ownership Secure System) for the BOI data and will deploy the BOSS to help law enforcement agencies prevent the use of anonymous shell companies for money laundering, tax evasion, terrorism, and other illegal purposes. It will not make the BOI reports publicly available.

The CTA applies only to business entities such as corporations and LLCs that are formed by filing a document with a state secretary of state or similar official. It also applies to foreign business entities that register to do business in the United States.

Some businesses are exempt from the CTA, those businesses include:

• larger businesses with 20 or more full-time employees (work more than 30 hours per week) and $5 million in US-sourced gross receipts that were reported on their prior-year tax return, and have a physical presence in the US, and
• businesses already heavily regulated by the government, such as publicly traded corporations, banks, insurance companies, non-profits, and others.

The CTA does not apply to sole proprietors or general partnerships in most states. But it does apply to single-member LLCs, even though the tax code disregards such entities and taxes them on Schedule C, E, or F of Form 1040.

The initial BOI report filing does not expire, and you don’t need to renew it. But you have an ongoing duty to keep the BOI report up to date by reporting any changes to FinCEN within 30 days of occurrence.

Failure to comply can result in hefty monetary penalties and up to two years in prison.

If you want to discuss this reporting process, you can call or email our office.