Beneficial Ownership Information Reporting under the Corporate Transparency Act – Part 2

In the previous newsletter (in case you missed it: Click Here), we went over the new Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA) and why the new reporting requirements were put in place. Most companies will be subject to reporting the information on beneficial owners of the company starting January 1, 2024.

A beneficial owner is any individual who either exercises substantial control over a company, OR owns or controls 25 percent of the ownership interest of a company. An individual exercises substantial control if they 1. Serve as a senior officer of the company; 2. has authority over the appointment or removal of any senior officer or member of the board; or 3. directs, determines or has substantial influence over important decisions made by the reporting company.

If an individual is a beneficial owner, they will need to provide their name, address, date of birth, and an image of a document containing a unique identifying number (passport, driver’s license, etc.) This information will be going on the Company’s report. These four pieces of information can also be provided directly to FinCEN, who will then assign a “FinCEN identifier” which can be used on the Company’s report instead of gathering and submitting the pieces of information for each beneficial owner.

Companies that were created or registered prior to January 1, 2024, will have a full year to file the initial reports. Any companies that are created or registered after January 1, 2024, will have 30 days after receiving the notice of creation or registration. If a report is found to be inaccurate, the Company will have 30 days to file a corrected report from the date the error is found.

It is important to be aware of these reports and their due dates. Failure to file these reports can result in civil fines up to $500 per day while the report is unfiled, and a possible $10,000 criminal fine. Information on how the forms are filed will follow once FinCEN has implemented their new system for reporting.  

Scott Simpson, is a Tax Manager at Katz, Nannis + Solomon, P.C. If you have any questions or would like to speak with one of our tax professionals, please contact our office at 781-453-8700