IMPORTANT UPDATE ON THE CORPORATE TRANSPARENCY ACT (CTA) AND THE BENEFICIAL OWNERSHIP INFORMATION (BOI) FILING REQUIREMENT
Compliance Deadline Currently On Hold Pending Further Court Action
On December 9, 2024, FinCEN released a statement on its website acknowledging that in light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information (“BOI”) reports with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may choose to voluntarily submit beneficial ownership information reports during this time.
As a reminder, the CTA established a requirement for most business entities (referred to as “reporting companies”) that were in existence prior to January 1, 2024, to submit Beneficial Ownership Information Reports (BOIR) with a compliance deadline of January 1, 2025.
If the order granting a nationwide preliminary injunction is stayed or overturned, it is uncertain how much, if any, additional time reporting companies will be provided to submit BOI reports that would have been due in the absence of the injunction. Therefore, reporting companies that have not yet filed their initial BOI reports, and those that have changes to report since their initial filing, should continue the process of gathering relevant information for their BOI reports, and be ready to file on short notice.
**Information on reporting requirements is outlined below**
Contact EagleStone if you have questions about the filing requirements and next steps. We are available to help you prepare to meet the requirement.
The Corporate Transparency Act and Beneficial Owners’ Reporting Requirement
Beginning January 1, 2024, the Corporate Transparency Act requires many companies to report information to FinCEN (US Treasury Financial Crimes Enforcement Network) about the individuals who ultimately own or control them. FinCEN began accepting reports on January 1, 2024.
The information required is related to the company’s beneficial owner/s – individuals who own or control the company. A beneficial owner is an individual who owns 25% or more of the company, or someone who exercises substantial control over the company, such as senior officers.
Who Must Report?
A corporation, limited liability company, or entity created in the United States that is registered with a State’s Secretary of State (SOS), or a foreign company that registered with a State’s Secretary of State. Schedule C sole proprietor LLCs, Schedule E rental LLCs and Schedule F farm LLCs are also required to report if they registered with the Secretary of State.
Who Is Exempt?
Twenty-three types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.
When Must This Information Be Reported?
- If your company existed before January 1, 2024, it must file its initial beneficial ownership information report by January 1, 2025.
- If your company was created or registered on or after January 1, 2024, and before January 1, 2025, then it must file its initial beneficial ownership information report within 90 calendar days after receiving actual or public notice that its creation or registration is effective.
- If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
To learn more about this reporting requirement, including how to report, what must be reported, and penalties for failing to comply, go to https://www.fincen.gov/boi.
FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers, such as accountants, lawyers, or enrolled agents.
Please contact EagleStone if you have questions or need assistance.
Sincerely,
The EagleStone Tax & Accounting Services Team
