Federal Beneficial Ownership Information Requirement
The reporting requirements under the CTA come into effect on January 1, 2024. Business entities formed prior to such date will have until January 1, 2025, to comply with the CTA’s reporting requirements.
Any domestic reporting company formed on or after January 1, 2024, must file a BOI report between 30 and 90 days of the effective date of the document filing.
Any entity that becomes a foreign reporting company on or after January 1, 2024, must file a BOI report between 30 and 90 calendar days of the effective date of the registration filing.
A domestic reporting company formed prior to January 1, 2024, and an entity that registered as a foreign reporting company prior to January 1, 2024, must file an initial report by January 1, 2025.
Certain businesses, referred to by FinCEN as “reporting companies,” will be required to report beneficial ownership information to FinCEN. Reporting companies include domestic and foreign (formed outside
the U.S.) businesses.
Domestic reporting companies are corporations, limited liability companies, and other entities that are formed by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe.
Foreign reporting companies are corporations, limited liability companies, and other entities that are formed in a foreign country and are registered to do business in the United States or in any Tribal jurisdiction by submitting a document with the secretary of state or any similar office under the law of a U.S. state or Indian tribe.
A reporting company is required to file the BOI report unless an exemption applies.
The CTA lists 23 categories of entities that are exempt from reporting. View the list of exemptions here: https://www.fincen.gov/boi-faqs
Many of the exempt categories are already subject to similar regulation such as banks, credit unions, tax- exempt entities, public utilities, and large operating companies.
Business entities that do not fall within the scope of the reporting requirements include sole
proprietorships, some general partnerships, foreign entities not registered to do business in the U.S., unincorporated associations, and wealth planning trusts.
For an entity to qualify as a “large operating company”, the following criteria must be met:
- Employs 20 or more full-time employees in the United States.
- Has an operating presence at a physical address within the United States.
- Filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5M in gross receipts or sales. This excludes gross receipts or sales from sources outside the United States.
Tax-exempt entities are also exempt from the CTA filing requirements. These entities include any organization that is described in section 501(c) of the Internal Revenue Code and exempt from tax under section 501(a).
A tax-exempt entity must closely monitor its tax-exempt status to avoid penalties for failure to report a change in status. If a tax-exempt entity loses its tax-exempt status, then the entity must report beneficial ownership information to FinCEN within 180 days.
As a new entity must report with FinCEN between 30 and 90 days of the effective date of the filing or registering to do business in the United States, a nonprofit entity may need to submit the initial report to FinCEN. If the entity receives tax-exempt status approval from the IRS within 30 days of forming the entity, then it is exempt from filing. However, in most cases, a new nonprofit entity will not receive tax-exempt status from the IRS between 30 and 90 days of registering with the secretary of state or similar office. On average, it takes 3-6 months for the IRS to issue a determination letter which is the official recognition of federal income tax exemption under 501(c). If a nonprofit entity files the initial report with FinCEN and then receives tax exempt status later, then the entity should file an updated report to state the reporting company is now eligible for an exemption.
The reporting company must indicate the type of report being submitted (initial report, correction of a prior report, or update to a prior report).
Company information
Reporting companies must provide the following information about itself:
- The legal name of the company.
- Any trade name (DBA) used by the company.
- The current street address of its principal place of business. If the principal place of business is not in the U.S., then the company will report the address from which it conducts business in the U.S.
- Taxpayer identification number (EIN/SSN/ITIN, as appropriate).
Reporting companies must provide the following information for each beneficial owner:
- The individual’s legal name; date of birth and residential street address.
- A unique identifying number from an acceptable identification document.
- The name of the state or jurisdiction that issued the acceptable identification document.
- An image of the acceptable identification document.
A reporting company created on or after January 1, 2024, must provide the following information for the company applicant:
- The individual’s legal name; date of birth and complete current address.
- Report the individual’s residential street address, except for company applicants who form or register a company in the course of their business, such as paralegals. For such individuals, report the business street address. The address is not required to be in the United States.
- A unique identifying number from an acceptable identification document.
- The name of the state or jurisdiction that issued the acceptable identification document.
- An image of the acceptable identification document.
An acceptable identification document is one of the following:
- A non-expired driver’s license issued by a U.S. jurisdiction.
- A non-expired identification document issued by a U.S. jurisdiction, local government, or Indian Tribe used for the purposes of identifying the individual.
- A non-expired passport issued by the U.S. government.
- If the individual does not have any of the three forms of identification described above, then they may provide the identifying number from a non-expired passport issued by a foreign government.
A beneficial owner is any individual (1) who directly or indirectly exercises “substantial control” over the reporting company, or (2) who directly or indirectly owns or controls 25 percent or more of the
“ownership interests” of the reporting company.
An individual can exercise “substantial control” over a reporting company if they direct, determine, or exercise substantial influence over important decisions the reporting company makes. This includes
senior officers in the reporting company or individuals who have authority over the appointment or removal of senior officers or a majority of the board.
“Ownership interests” generally refer to arrangements that establish ownership rights in the reporting company, including simple shares of stock as well as more complex instruments.
For additional information on “substantial control” and “ownership interests” review the language in the Beneficial Ownership Information Reporting Regulations:
https://www.govinfo.gov/content/pkg/FR-2022-09-30/pdf/2022-21020.pdf or on the FinCEN website https://www.fincen.gov/boi-faqs
There are a few limited exceptions to who qualifies as a beneficial owner. Under the Rule, minor children (provided a parent or legal guardian is reported as a beneficial owner), nominees, employees (excluding senior officers), future inheritors, and creditors do not qualify as beneficial owners.
There may be up to two individuals who qualify as a company applicant.
- The individual who directly submitted the document that creates the entity, or in the case of a foreign reporting company, the document that first registers the entity to do business in the U.S.
- The individual that is primarily responsible for directing or controlling the submission of the relevant document by another.
Only reporting companies created or registered to do business in the U.S. on or after January 1, 2024, must report company applicant information. This requirement will not apply to an entity created or registered prior to January 1, 2024. Additional information on determining the company applicant can be found here: https://www.fincen.gov/boi-faqs
No, there is no fee for submitting the BOI report to FinCEN.
Reporting companies will submit reports electronically through FinCEN’s Beneficial Ownership Secure
System (BOSS). This system is currently being developed. Reports will not be accepted prior to January 1, 2024. There is no option to file a paper form.
Note: Beware of potential scam websites! This new filing requirement is likely to result in scam websites or organizations attempting to trick internet users and business owners to enter their beneficial
ownership information into a scam website. They may lure users through many communication channels, such as social media, email, and text messaging. Search results are sometimes manipulated through search engine optimization methods, leading to malicious sites appearing in top positions.
Reporting companies should not report beneficial ownership information to any organization except for FinCEN. Websites are often set up to spoof a legitimate site. This is done by using a domain name that looks or sounds like legitimate site addresses. For example, instead of IRS.gov, a spoof site might use
IRS.com or IRS.org. When submitting the report to FinCEN, be sure to go to the online filing system on
FinCEN.Gov.
No. The beneficial ownership information required by the Corporate Transparency Act should only be submitted directly to FinCEN through the online filing system at FinCEN.gov. To protect your privacy, you should not include this information when forming or registering the business with the secretary of state or similar office.
The CTA authorizes FinCEN to collect and share this information with authorized government authorities and financial institutions, in certain circumstances. FinCEN is actively working on the rulemaking process to establish the beneficial ownership access rule and forms.
Yes, updates and corrections must be submitted to FinCEN within 30 calendar days of the change. Updates include a change of address when a beneficial owner moves to a new address.
Yes, if a reporting company subsequently becomes eligible for an exemption from the reporting requirement after the filing of its initial report, this will be deemed a change requiring an updated report.
No, the law only requires an initial report, updated report (when necessary), and a corrected report (when necessary).
Information is available on www.fincen.gov/boi
Contact FinCEN if you have additional questions:
[email protected]
Phone number: 1-800-767-2825
https://www.fincen.gov/contact
If you need additional assistance understanding FinCEN reporting requirements for your entity, contact a qualified attorney.
The Federal Corporate Transparency Act, was passed in 2021. This bill requires businesses to file a beneficial ownership report with a federal agency, FinCEN (Financial Crimes Enforcement Network), starting January 1, 2024.
If your entity was formed as a domestic entity or was registered to do business in the U.S. as a foreign entity prior to January 1, 2024, then you must file your initial BOI report by January 1, 2025.
If your entity was formed as a domestic entity or registered to do business in the U.S. as a foreign entity on or after January 1, 2024, then you have between 30 and 90 days from the effective date of registration to submit the BOI report.
Updates or corrections to reports must be submitted within 30 calendar days of the change.
There is no filing fee.
A “reporting company” must file a BOI report. A business is deemed a “reporting company” if it submits a formation or registration document with the secretary of state (or similar office) such as a corporation or LLC. If your business was not formed or registered by filing a document with the secretary of state (or similar office), such as a general partnership or a sole proprietorship, then you are not a reporting company and you don’t need to file the beneficial ownership report.
The following entities, such as banks, credit unions, tax-exempt entities, and large operating companies, are exempt from reporting. These entities are likely already filing this information with a government
agency under separate regulatory requirements. You may review all exemptions at: www.fincen.gov/boi- faqs
No, there is no requirement to submit any documentation if you determine your entity is exempt.
FinCEN defines a “foreign business” a little differently than we do. For the purpose of beneficial
ownership reporting to FinCEN, the entity is considered foreign if it was formed outside of the U.S. but is registered to do business in a U.S. jurisdiction. If the entity was formed in another U.S. jurisdiction, it is considered a domestic entity.
Foreign businesses qualified to conduct business with a U.S. jurisdiction prior to January 1, 2024, must submit the report to FinCEN by January 1, 2025. Foreign businesses qualifying to conduct business in North Carolina for the first time on or after January 1, 2024, must submit the report to FinCEN between 30 and 90 calendar days of the effective date of the filing.
We are unable to determine if you are a reporting company or not. I recommend you read the additional information here: [provide website information where you want to direct your customers for general CTA information]. If you have additional questions, Contact FinCEN.
[email protected]
Phone number: 1-800-767-2825
https://www.fincen.gov/contact
If you need additional assistance understanding the reporting requirements, Contact a qualified attorney.
Details can be found here [provide website information where you want to direct your customers]. The report requires information about the company and contact information about your beneficial owners. If the entity was formed on or after January 1, 2024, then you also need to provide information on the company applicant who submitted the form with the secretary of state.
A beneficial owner is any individual who either exercises substantial control over a company or owns or controls at least 25% of the ownership interest of the company.
A company applicant is the individual who directly submitted the document that created the domestic reporting company and the individual who is primarily responsible for directing or controlling the submission of the formation document if more than one individual is involved in the submission of the document.
More details can be found here. We recommend you review this information to make that determination.
The Corporate Transparency Act is federal legislation passed by Congress that requires a report to be submitted to the U.S. Department of Treasury’s Financial Crimes Network (FinCEN). This is not legislation drafted by our office and the information is not submitted to or accessible by our office.
The CTA provides that willfully reporting or attempting to report false or fraudulent beneficial ownership, or willfully failing to report or make updates to the reported data shall be punished with a civil penalty of up to $500/day while the violation continues (up to $10,000) and a criminal penalty of up to two years in prison.
Our office is not collecting this information, nor do we have access to the information reported to
FinCEN. FinCEN, a part of the U.S. Department of Treasury, is collecting this information and may share it with authorized law enforcement and financial institutions. I recommend you contact FinCEN if you have additional questions or concerns.
[email protected]
Phone number: 1-800-767-2825
https://www.fincen.gov/contact