While enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting has been suspended since December 2024, a February 18, 2025 decision by the U.S. District Court for the Eastern District of Texas allows the reporting requirements to again be in effect. Business owners must understand and comply with the CTA and its BOI reporting requirements. This new federal law represents one of the most significant changes to business compliance in recent years.
What is the Corporate Transparency Act?
The Corporate Transparency Act, enacted in 2021, is designed to enhance transparency in company ownership and prevent illicit activities such as money laundering, tax fraud, and other financial crimes. The law requires most companies operating in the United States to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
Who Needs to Report?
Your company likely needs to file a BOI report if it is:
- A corporation, limited liability company (LLC), or similar entity
- Formed by filing documents with a secretary of state or similar office
- Registered to do business in any U.S. state
However, there are some exemptions, particularly for:
- Large operating companies with more than 20 full-time employees and $5 million in gross receipts
- Certain regulated entities like banks, credit unions, and insurance companies
- Tax-exempt organizations
- Inactive entities meeting specific criteria
What Information Must Be Reported?
The BOI report requires specific information about:
- The Reporting Company:
- Full legal name and any trade names
- Current street address
- Jurisdiction of formation
- Tax identification number
- Beneficial Owners (individuals who own or control 25% or more of the company):
- Full legal name
- Date of birth
- Current residential address
- Unique identifying number (such as passport or driver’s license number)
- Image of the identification document
Key Deadlines
- Companies formed before January 1, 2025, must file by March 21, 2025
- Companies formed after January 1, 2025, have 30 days from formation to file
- Any changes to reported information must be updated within 30 days
Steps to Ensure Compliance
- Determine if your company must report
- Identify all beneficial owners
- Gather required documentation
- Register for FinCEN’s BOI E-Filing System
- Submit accurate and complete information before the deadline
- Maintain records and prepare for ongoing compliance
Penalties for Non-Compliance
The consequences of failing to comply with BOI reporting requirements are serious:
- Civil penalties of up to $500 per day
- Criminal penalties including fines up to $10,000
- Potential imprisonment for up to two years
- Reputational damage
Protecting Your Information
FinCEN has implemented strict security measures to protect submitted information. Access to BOI data is limited to:
- Authorized government agencies for law enforcement, national security, or intelligence purposes
- Financial institutions with customer consent for customer due diligence
- Federal regulators
Next Steps
With the March 21, 2025 deadline approaching, we recommend:
- Starting the compliance process early to avoid last-minute rushes
- Consulting with legal counsel to ensure proper interpretation of requirements
- Establishing internal procedures for ongoing compliance
- Maintaining accurate records of all beneficial ownership information
Stay Informed
The requirements under the CTA are complex and may continue to evolve. It’s essential to:
- Monitor FinCEN announcements for updates
- Maintain contact with your legal counsel
- Keep beneficial ownership records current
- Prepare for potential regulatory changes
Remember, compliance with the CTA is not optional. Taking action now will help ensure a smooth transition to these new reporting requirements and avoid potential penalties.
Please consult with qualified legal counsel for specific guidance regarding your company’s obligations under the CTA. The requirements can be complex, and this overview should not be considered legal advice.
Founded by a nurse attorney and with offices in Acton, Andover, and Sudbury, Massachusetts, Generations Law Group helps families navigate the complex areas of estate planning and elder law to inform and protect loved ones of every generation.
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