The Corporate Transparency Act (“CTA”) was enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act. The CTA includes significant reforms to anti-money laundering laws and is intended to help prevent and combat money laundering, terrorist financing, corruption, and tax fraud. The CTA establishes a beneficial ownership reporting requirement for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States.
When does the CTA take effect?
Under the CTA, many new and existing companies will need to report on January 1, 2024. However, business entities formed prior to this date will have until January 1, 2025.
Who is required to report beneficial ownership information (“BOI”)?
Certain businesses, referred to by FinCEN as “reporting companies,” will be required to report beneficial ownership information to FinCEN. Reporting companies include domestic and foreign (formed outside the U.S.) businesses.
Domestic reporting companies are corporations, limited liability companies, and other entities that are formed by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe.
Foreign reporting companies are corporations, limited liability companies, and other entities that are formed in a foreign country and are registered to do business in the United States or in any Tribal jurisdiction by submitting a document with the secretary of state or any similar office under the law of a U.S. state or Indian tribe.
A reporting company is required to file the BOI report unless an exemption applies.
Who is exempt from reporting requirements?
The CTA lists 23 categories of entities that are exempt from reporting. This list can be found in IRS.GOV website, please visit for more information.
A “large operating company” is exempt from reporting requirements. What is considered a “large operating company”?
For an entity to qualify as a “large operating company”, the following criteria must be met:
- Employs more than 20 full-time employees in the United States.
- Has an operating presence at a physical address within the United States.
- Filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5M in gross receipts or sales. This excludes gross receipts or sales from sources outside the United States.
Is there a fee for submitting the BOI report to FinCEN?
No, there is no fee for submitting the BOI report to FinCEN.
How are BOI reports submitted to FinCEN?
Reporting companies will submit reports electronically through FinCEN’s Beneficial Ownership Secure System (BOSS). Reports will not be accepted prior to January 1, 2024.
Note: Beware of potential scam websites! This new filing requirement is likely to result in scam websites or organizations attempting to trick internet users and business owners to enter their beneficial ownership information into a scam website. They may lure users through many communication channels, such as social media, email, and text messaging. Search results are sometimes manipulated through search engine optimization methods, leading to malicious sites appearing in top positions.
