As we are approaching the end of 2024, we wanted to remind you that as of January 1, 2024, businesses were required to disclose beneficial ownership information (“BOI”) of people who own or control a company to the Financial Crimes Enforcement Network (FinCEN). This disclosure is to comply with the Corporate Transparency Act (“CTA”). The BOI reporting requirement is intended to help U.S. authorities combat money laundering, terrorism financing, and other illicit activities.
Domestic companies that are required to report include corporations, limited liability companies (“LLCs”) or any similar entity created by the filing with a secretary of state or any similar office. Under the CTA, foreign companies are required to report including corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state by filing with a secretary of state or any similar office.
There are 23 exemptions to the CTA filing requirements including publicly traded companies, insurance companies, insurance producers, banks, among others. Many of these entities are exempt because they already disclose their BOI to regulatory agencies.
Many of you may qualify under the “Large Operating Company” exemption (Exemption #21) if all six (6) of the following criteria are met:
- Your company employs more than 20 full time employees;
- More than 20 full-time employees of the entity are employed in the United States;
- Your company has an operating presence at a physical office within the United States;
- Your company filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales;
- Your company reported this greater-than-$5,000,000 amount as gross receipts or sales (net of returns and allowances) on your company’s applicable IRS form such as the IRS Form 1120; and
- When gross receipts or sales from sources outside the United States (as defined under Federal tax principles) are excluded from your company’s gross receipts or sales, the remains greater than $5,000,000.
When Should You Report
- If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025, to report BOI.
- If your company is created or registered in 2024, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
- If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
- Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.
Please note that this information is being provided to make you aware of the deadlines for this compliance requirement. We encourage you to consult with your own lawyer or professional adviser to determine whether you need to comply or are exempt from the CTA’s filing requirements.
