Posted on Author AKC Law Categories Featured Updates

By Alex Montoya

The effective date of the Corporate Transparency Act (“CTA”) has arrived. Effective January 1, 2024, the CTA has drastically changed corporate ownership reporting requirements for millions of new and existing entities formed or registered to do business in the United States. The CTA was enacted by Congress in 2021 as a part of the National Defense Authorization Act to reduce financial crimes and illicit activity conducted through shell companies with opaque ownership structures. As articles in previous editions of this newsletter have addressed, the CTA will require “reporting companies”  (most new and existing entities in the United States) to file Beneficial Ownership Information Reports (“BOI Reports”) with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”), the agency tasked with implementing and overseeing the CTA. Many factors affect who has to file a BOI Report, what has to be reported, and when the BOI Report has to be filed.

Brief CTA Overview:

Who:   All entities formed or registered to do business in the United States before or after January 1, 2024 and that are not exempt under any of the CTA’s 23 exemptions (exemptions discussed in previous articles) are subject to the CTA reporting requirements.

What: BOI Reports must initially include:

  1. Reporting Company Information
    • Full Legal Name
    • Trade Name(s)
    • Principal Place of Business
    • Jurisdiction of Formation
    • Taxpayer Identification Number
  2. Beneficial Owner Information – Individuals with substantial control and/or 25% ownership interest
    • Full Legal Name
    • Date of Birth
    • Current Address (residential)
    • Unique Identifying Number (from valid State ID or US Passport)
    • Image of the document with the Unique Identifying Number
  3. Company Applicant Information – The individual who files the document that creates the entity and/or directs and controls the filing (only for entities filed after 2024)
    • Full Legal Name
    • Date of Birth
    • Current Address (business address)
    • Unique Identifying Number (from valid State ID or US Passport)
    • Image of the document with the Unique Identifying Number

*An updated BOI Report is required if any information initially reported above changes or is inaccurate

When:  The BOI Report filing deadline depends on when the entity was formed.

  1. Entities formed any time before January 1, 2024:
    • Initial BOI Report is due by January 1, 2025
    • After the initial BOI Report is filed, any updated/corrected BOI Report is due within 30 calendar days of the update/discovery of an inaccuracy
  2. Entities formed in 2024:
    • Initial BOI Report is due 90 calendar days after the entity is formed (when actual or public notice of the entity’s registration becomes effective)
    • After the initial BOI Report is filed, any updated/corrected BOI Report is due within 30 calendar days of the update/discovery of an inaccuracy
  3. Entities formed in 2025:
    • Initial BOI Report is due 30 calendar days after the entity is formed (when actual or public notice of the entity’s registration becomes effective)
    • After the initial BOI Report is filed, any updated/corrected BOI Report is due within 30 calendar days of the update/discovery of an inaccuracy

The attorneys at AKC Law have followed each rulemaking comment and promulgation session since the Act was passed by Congress and we are prepared to answer questions related to the CTA and the rollout of FinCEN’s BOI reporting system. Please contact Alex Montoya at [email protected] for more information about the CTA and how it will affect your business.