Corporate Transparency Act
- Joel Pieper
- Nov 28, 2023
- 2 min read
Updated: May 6, 2024
The Corporate Transparency Act (the “Act”) was passed into law in 2021 and went into effect on 1/1/2024. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
The Act requires all “reporting companies” to submit a beneficial ownership information (“BOI”) report to the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury, containing information for each of the company’s “applicants” and “beneficial owners.”
A reporting company is defined to include any non-exempt U.S. domestic entity or any foreign entity that is registered to do business in the U.S, which includes domestic corporations and LLCs. There are a number of exemptions to the reporting requirements of the Act, notably for large operating companies with more than 20 full-time employees & gross receipts in excess of $5 million dollars. The large operating company exemption also applies to all single member LLC disregarded entities owned by a large operating company.
Each existing LLC will have a BOI filing requirement, due by 12/31/2024. For any and all new entities created after January 1st for the 2024 tax year, FINCEN will mandate filing the BOI report within 90 days after formation.
The BOI report will disclose:
(a) the identity of the individual who was primarily responsible for directing or controlling the filing of the LLC articles with the SOC (e.g. – your registered agent)
(b) all beneficial owners of each entity. A beneficial owner is any individual who, directly or indirectly, exercises “substantial control” over a reporting company, or owns or controls at least 25% of the ownership interest of a reporting company. Any individual exercises “substantial control” over a company if the individual serves as a senior officer of the company, has authority over the appointment or removal of any senior officer, has substantial influence over important decisions, or has any other form of substantial control over the entity.
The BOI report will provide your full legal name, date of birth, current residential address (P.O. Box’s aren’t accepted), state driver’s license or passport number, and an image of your state driver’s license or passport.
Failure to comply with the CTA carries both criminal and civil penalties under the Act, including civil fines of up to $500 per day for noncompliance, criminal fines of up to $10,000, and up to two years in prison.
If you have any questions please don't hesitate to reach out to our office at 303.651.0771
Click the link below to take you directly to the BOI Reporting website:
This post title really struck a chord with me. It immediately brought back a memory from a few years ago when I was helping a family member navigate a complex business setup. We were trying to understand all the reporting requirements and who actually owned what, and it felt like we were constantly hitting brick walls. There was so much jargon and so many layers that it was incredibly difficult to get a clear picture https://www.sahealth.sa.gov.au/ We ended up hiring someone just to help us decipher it all, and it was a significant expense. It made me so frustrated that something so fundamental – knowing who is behind a business – could be so opaque. I'm really interested to learn…
This post really hit home for me, and I know several people who absolutely need to read it. My understanding of the Corporate Transparency Act just leveled up considerably, so a huge thank you for breaking it down. I strongly agree with your points regarding corporate transparency, especially the emphasis on how it impacts everyday consumers and small businesses https://www.commercialradio.au/ It’s something I’ve been thinking about a lot lately; in fact, I actually changed my whole approach to how I view business dealings recently because of these exact issues. This is precisely the kind of in-depth discussion the Corporate Transparency Act deserves, moving beyond just the legal jargon. It’s fascinating how much more complex corporate transparency can be than it…
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