Beneficial Ownership Information Reporting Under The Corporate Transparency Act

In September of 2022, a final ruling was issued by the Financial Crimes Enforcement Network (FinCEN) implementing the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). This ruling will have a major impact on the reporting of ownership for most business entities, with the enactment going into effect on January 1, 2024.

The CTA was enacted in 2021 with the intention to help prevent beneficial owners from laundering or hiding money and other assets in the United States. Shell and front companies can be used by individuals to shield identities and launder money through the US. The new reporting requirements will make it more difficult for beneficial owners to hide their assets and launder money.  

The BOI reporting rule will require most businesses to report the information on beneficial owners of the company. This includes the name, birth date, address, and an identifying number as well as an image verifying that ID number. The rule applies to both domestic and foreign companies. A domestic company is any corporation, LLC, or any other entity that was created by filing a document with a secretary of state or similar office of a US state. A foreign company is required to file when they are registered to do business in any state in the US.  A company is exempt from reporting if they employ more than 20 people in the US, had $5 million of gross revenue on the prior year’s tax return, and has a physical office in the US. All of these must be met to be exempt.

The BOI report may be cumbersome and significant for some. In the next article, we will go into detail of who a beneficial owner is, what is required in the report, and when and where to file the report.