Reporting companies are now required by the Corporate Transparency Act (CTA) to submit identifying information about their company applicants. A company applicant is a person who is either:

1. Primarily responsible for supervising or controlling the filing of the pertinent formation or registration document by another individual
2. Responsible for filing the documents that created the entity (for a foreign entity, this is the person who directly files the document that first registers the foreign reporting company to conduct business in a state)

This rule frequently covers attorneys practicing in business capacities. Check out part one of this two-part blog series for background information about the CTA.

Corporate Transparency Act reporting requirements

The CTA has particular reporting obligations. In particular, the following details must be in the report to FinCEN:

• The legal name of the entity (or any trade or doing-business-as name)
• The address of the entity
• The jurisdiction where the entity was formed
• The entity’s Taxpayer Identification Number
• The name, address, date of birth, unique identifying number information of each beneficial owner (such as a U.S. passport or state driver’s license number), and an image of the document that contains the identifying number

Reporting dates to pay attention to

On November 29, FinCEN declared that it was changing the beneficial ownership information (BOI) reporting guidelines. Reporting organizations were initially given 30 days or one year from the implementation date (January 1, 2024) to fulfill their reporting obligations. Reporting companies will now have one year, ninety days, or thirty days from the effective date of January 1, 2024, to meet the reporting obligations.

The date of incorporation of the entity determines the compliance deadline. Reporting firms established or registered before January 1, 2024, have until January 1, 2024, to file initial reports and comply. After receiving their creation or registration documents, those who enrolled on or before January 1, 2024, but before January 1, 2025, will have ninety days to file their initial reports. After receiving their creation or registration paperwork, those who registered on or after January 1, 2025, will have 30 days to file their initial reports. FinCEN will only accept beneficiary ownership data up until the effective date.

Reporting firms can file a revised report within 30 days of the initial filing, indicating any changes to the previously reported information. Furthermore, reporting organizations have 30 days from the date they become aware of the issue to rectify false information in previously submitted reports.

Keep in mind that reports submitted to FinCEN are not publicly accessible. Nonetheless, the IRS, U.S. Treasury Department, and agencies involved in law enforcement, intelligence, and national security will be among those with access to the data.

What consequences result from not adhering to the new reporting guidelines? A $500 daily civil penalty may be imposed for any fraud or omission in a report for as long as the report is false or missing. In addition, noncompliance may result in a $10,000 fine or, potentially, a two-year prison sentence.

Taking the next steps

How can your business guarantee compliance right now? Consider your existing circumstances. If your company must fulfill these duties, follow these three steps:

1. Gather the necessary data
2. Make critical updates and revisions to internal regulations to ensure proper data reporting
3. Set up a system to monitor the reporting procedures.

For more information or questions about the Corporate Transparency Act and its reporting requirements, contact our RRBB advisors.

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