Corporate Transparency Act (CTA) Beneficial Ownership Information (BOI) Reporting 2024
If your entity was created by the filing of articles with the Indiana Secretary of State (or equivalent offices in other jurisdictions) it may be subject to the reporting requirements of the CTA. This post is to make you aware of those requirements in general and to inform you where you can find more information about the CTA. This is not a complete overview of all of the details of the CTA. The FinCEN website contains a handbook for small business owners and additional resources.
A. About the CTA
The CTA was enacted in 2022 to address the use of certain, non-publicly traded entities in the furtherance of financial crimes. The rules are enacted and enforced by the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of Treasury. The requirement to report certain information becomes effective on January 1, 2024. The reporting requirement is found at 1010.380 of title 31 of the Code of Federal Regulations.
B. How does it affect my entity?
The CTA requires that a reporting entity provide certain information about its “beneficial owners” and “company applicants” to FinCEN. This is called a beneficial ownership information (BOI) report.
The requirement applies to any entity that: 1) is/was created by filing a document with a Secretary of State, even if it is not strictly a “company,” and 2) does not qualify for one of the 23 exemptions listed in the Act. You should be sure to check the listing of exemptions to see if your entity may qualify.
In general, a beneficial owner is an individual who owns at least 25% of the shares or interest of a company orwho has substantial control over the company. This means that you may have to report information about one or more of your owners, and information about anyone who has control over major decisions of the company, even if he or she is not an owner.
A company applicant is a person who filed, or directed to be filed, the filing that created your entity with the Secretary of State. The person who filed your entity report is a company applicant and his/her information must be reported for entities formed on or after January 1, 2024. Anyone who prepared paperwork that he or she directed to be filed is also a company applicant. You will have at least 1, but not more than 2 company applicants.
C. What information about the beneficial owner, company applicant, and company must be reported?
For each individual who is a beneficial owner or company applicant, the company must provide:
Full legal name
Date of birth
Complete current address
Unique identifying number from a government document (e.g. non-expired passport, state ID, or drivers license)
Image of the government document with the unique identifying number
In lieu of collecting the above information, an individual may apply directly to FinCEN for an identifying number called a FinCEN ID. If a beneficiary owner or company applicant has a FinCEN ID, you do not need to report the information that person’s information above—you can report his or her FinCEN ID instead.
Each company must report:
Full legal name of company
Any trade or dba names
Complete address of principal place of business (note: this cannot be a PO Box or the address of an agent or other third party)
State of formation (or for a foreign company, state where first registered to do business)
Taxpayer ID/EIN
The filing of the report is done via the FinCEN portal. FinCEN does not charge a fee to file this report. If you are prompted to enter a credit card or notified of a charge, beware! You may not be at the official website, but at a third-party website charging you for that service.
D. Deadlines to File the BOI Report
If your entity existed before January 1, 2024 – you do not need to file your BOI report until 11:59PM December 31, 2024. You do not need to report any information about a company applicant if your entity existed before January 1, 2024.
If your entity is created on or after January 1, 2024 but before January 1, 2025 – you must file your BOI report within 90 days of the creation of the entity. You must file information about the company applicant.
If your entity is created on or after January 1, 2025 – you must file your BOI report within 30 days of the creation of the entity. You must file information about the company applicant.
E. Penalties for Noncompliance
Any person who willfully provides or attempts to provide false information in a BOI report, or who fails to complete (or to update or correct an inaccuracy or change on a report within 30 days), can be subject to civil and/or criminal penalties.
The penalties can be civil penalties of up to $500/per day for noncompliance, or criminal penalties of a fine of up to $10,000 or imprisonment for up to 2 years, or both. FinCEN has stated that senior officers of a company that fails to submit a BOI report may be held accountable for that failure!
F. What to Do Next
Determine if you are a reporting company. See Section B above.
Determine who is a beneficial owner of your company:
a. Review the names of the individuals who own 25% or more of your entity
b. Review the names of the individuals who have the authority to make substantial decisions about your company. Officers and directors should be considered in this review.
Begin to collect the information you will need from each of the individuals who you identify as a beneficiary owner. See the list above in item C for what information you must collect from each individual.
If your entity was formed on or after 1/1/2024, collect the information in item C above for the person(s) who was/were your company applicants.
Review the Small Entity Compliance Guide from FinCEN (provided with this letter). You can also access it at the link below.
Remember your applicable deadline to report this information and do not wait until the last minute to begin preparing your information.
G. Ongoing updates or corrections
If any information about a beneficiary owner changes, or you become aware of an inaccuracy, you must report it within 30 days of becoming aware of that change (or when you should have been aware of it). If an inaccuracy is corrected within 90 days of filing the report, there are no penalties.
H. Find More Information
Visit the official FinCEN website for the CTA at: www.fincen.gov/boi. You will find resources, checklists and updated news about the CTA at this website and a link to the portal to file your BOI report.
Please remember that this is not a complete overview of all of the details and requirements of the CTA. Please review the information provided by FinCEN or contact Freitag & Martoglio if you have questions about CTA or how to comply.