BOIR-Corporate Transparency Act
What is the Corporate Transparency Act and why is it important to me as an owner of a small business or an LLC?
The Corporate Transparency Act (CTA) requires all limited liability companies (LLCs), corporations, and other similar entities that were set up on or after January 1, 2024 to file a Beneficial Ownership Report (BOIR) identifying who the beneficial owners of the company are with the federal agency known as the Financial Crimes Enforcement Network (FinCEN). FinCEN is a part of the U.S. Department of Treasury.
The CTA is designed to prevent and crack down on money laundering, tax fraud, terrorist financing, foreign government interference, and other corruption. Noncompliance in filing the required documentation with the federal government could potentially lead to serious civil and criminal penalties such as fines of up to $10,000 or imprisonment for up to 2 years.
What are the requirements of the CTA and how can you comply?
The CTA requires all businesses and LLCs established after January 1, 2024 to file a Beneficial Ownership Information Report (BOIR). These businesses and LLCs have 90 calendar days after receiving actual or public notice that its creation or registration is effective to file their BOIR.
Businesses that were set up prior to January 1, 2024 have until January 1, 2025 to file their BOIR.
Companies created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.
Businesses and LLCs are also required to report and file amendments and updates within 30 days of any change in ownership.
What information is typically included in the BOIR?
The BOIR mainly identifies information about the beneficial owners of the business or LLC. Most small business entities are required to file a BOIR, but entities that are already subject to robust disclosure requirements may be exempt from filing the BOIR. Reporting companies set up on or after January 1, 2024 may also have to include information about applicants who assisted beneficial owners in setting up their companies.
The BOIR typically includes the reporting company’s complete legal name, any trade names or DBA names, address, and federal tax ID number or other identifying number of the beneficial owners, as well as an identification document such as an owner’s passport or driver’s license. Beneficial owners are those who hold a significant amount of the company’s equity or who command a minimum of 25% of its operations. The BOIR will also require that an image of the identification document be uploaded when the report is filed.
What are some acceptable forms of identification that will meet the reporting requirement when filing your BOIR?
The only current acceptable forms of identification are:
A non-expired U.S. driver’s license (including any driver’s licenses issued by a
commonwealth, territory, or possession of the United States);
A non-expired identification document issued by a U.S. state or local government, or
Indian Tribe;
A non-expired passport issued by the U.S. government; or
A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).