Corporate Law: Corporate Transparency Act of 2021: Impending deadline of December 31, 2024 for existing corporations to file a BOI.

Corporate Transparency Act (CTA) Summary

Purpose

The CTA, which took effect on January 1, 2024, aims to combat illicit activities such as money laundering, tax fraud, and terrorism financing by increasing transparency around the ownership of U.S. businesses.

Beneficial Ownership Information (BOI) Reporting Requirements

1. Who Must Report: The CTA requires many U.S. businesses, particularly smaller privately held companies, to file a BOI report with the Financial Crimes Enforcement Network (FinCEN). This includes both domestic and foreign entities that are formed or registered to do business in the U.S2.

2. Information Required: Reporting companies must provide information about the company itself (e.g., name, address, legal status) and its beneficial owners. Beneficial owners are individuals who directly or indirectly own or control 25% or more of the company, or who exercise substantial control over the company1.

3. Filing Deadlines: Existing companies must file their initial BOI report by January 1, 2025. Newly formed or registered companies must file within 90 days of their creation or registration1.

Ongoing Obligations

1. Updates and Corrections: Reporting companies must update or correct their BOI information within 30 days of any changes to the company's information or the information of its beneficial owners.

2. Exemptions: Certain entities are exempt from the reporting requirements, including publicly traded companies, governmental authorities, banks, and credit unions, among others.

3. Penalties: Failure to comply with the reporting requirements can result in civil penalties up to $591 per day and criminal penalties including fines up to $10,000 and up to two years of imprisonment.

Notice: The above is not to be considered legal advice. Obligations under the CTA can vary from business entity to business entity. Please contact us if you need advice related to your business entity or to determine if the CTA is applicable to you.