Corporate Transparency Act Overview

This article is part of a series of articles regarding the Corporate Transparency Act (“CTA”). 

You may have recently heard a lot about the CTA, this article highlights some of the frequently asked questions we receive regarding the CTA. 

What is the CTA? 

In 2020, Congress passed the Corporate Transparency Act (“CTA”).  Under the CTA, FinCEN (the “Financial Crimes Enforcement Network of the U.S. Treasury”) is required to develop a nationwide database of private company “beneficial owners”. The CTA requires every company in the U.S., unless it falls under an exemption, to file beneficial ownership information (“BOI”) reports with FinCEN. 

Who is a Beneficial Owner? 

A beneficial owner is any individual who exercises substantial control over your company, or who owns or controls at least 25% of the company. The beneficial owners may include shareholders, members, directors, the managers of an LLC, senior officers, and similar kinds of strategic persons associated with the company.

What is a BOI Report? 

A BOI Report is the report that is filed with FinCEN. These BOI reports include basic information regarding the company, and personally identifiable information about each beneficial owner of the company.

Is the BOI Report Publicly Available? 

No, the access to the BOI information is not publicly available. FinCEN is authorized to disclose BOI information under specific circumstances to certain authorized requestors. These requestors include federal law enforcement, national security agencies, state, and local law enforcement agencies, the Treasury Department, financial institutions (with the reporting company’s consent), and other government agencies. The authorized requestors are still subject to specific security and confidentiality requirements regarding the BOI information. 

When Do I Have to File By?

Companies formed before January 1, 2024, must file their initial BOI reports no later than January 1, 2025. Companies formed on or after January 1, 2024, must file their initial BOI reports within 90 calendar days from the date of formation. 

Do I Have to File Every Year? 

No, the BOI report is not an annual report. Companies must file an initial BOI report. After the company files its initial BOI report, it must file an amendment within 30 calendar days after any change in beneficial ownership, any change in the company information included in a prior BOI report, or any change in the personally identifiable information for any beneficial owner included in a prior BOI report. 

What Happens If My Company Does Not File? 

If a reporting company misses a filing deadline it may be responsible for a penalty of $500 per day.  If an individual willfully fails to file (or provides false information) that individual may be prosecuted for a felony, punishable by imprisonment. 

Can You Help Me File? 

Yes, our firm is able to help you file. Please reply to [email protected] or contact your primary Mavacy attorney. The cost to file will vary depending on the type of entity and ownership structure.