Update 12/4/2024: On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking the U.S. Department of Treasury from enforcing the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements. The nationwide injunction issued by the court effectively stops the enforcement of the CTA and its implementing regulations around the country. Read more
The Wegner CPAs Tax and Business Advisors have compiled the following frequently asked questions as a resource for clients navigating the Beneficial Ownership Information reporting process. These FAQs are intended to provide general information on the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) reporting requirements for small businesses and LLCs.
While these answers cover common questions, they are not exhaustive and should not be considered legal or compliance advice. Reporting requirements may vary based on specific business circumstances, and any entity with questions about its compliance obligations should refer to official resources provided by FinCEN or consult a qualified legal professional.
What is the Corporate Transparency Act (CTA), and why was it created?
The CTA was enacted to combat illicit financial activities by requiring many U.S. companies to disclose information about their beneficial owners. This law aims to create transparency in business structures, making it harder for criminals to use shell companies to hide illegal activities.
Who needs to file a Beneficial Ownership Information (BOI) report?
Most companies registered in the U.S., including limited liability companies (LLCs), corporations, and other legal entities, must file BOI reports. However, there are exemptions for certain entities, like publicly traded companies, banks, and tax-exempt nonprofits. Small business owners should review these exemptions carefully to determine if they need to report. FinCEN’s Small Entity Compliance Guide includes a checklist on page 11 that will help you determine if your organization qualifies for any exemptions.
Can my Wegner CPAs advisor assist me in filing a BOI report?
No, Wegner CPAs is prevented from filing this report on behalf of your business or LLC.
Who is considered a “beneficial owner” under the CTA?
A beneficial owner is anyone who either:
- Directly or indirectly owns or controls at least 25% of a company or
- Exercises substantial control over the company. This includes individuals involved in key decision-making, management, or with financial interests in the company.
What information must be included in a BOI report?
A BOI report must include:
- Full names of beneficial owners
- Dates of birth
- Current residential or business addresses
- Government-issued identification numbers and images of the ID
When is the deadline for BOI reporting?
- Existing companies (formed before January 1, 2024) have until January 1, 2025, to file their BOI reports.
- Newly created companies (formed on or after January 1, 2024) must file within 30 days of receiving their registration. Keeping track of deadlines is essential to avoid penalties.
How do I file a BOI report with FinCEN?
BOI reports are filed electronically through FinCEN’s BOI reporting system. FinCEN offers step-by-step guidance and video tutorials on using the system, making it accessible for small business owners. Contact your legal representative if you need further guidance.
Are there penalties for failing to file a BOI report or providing incorrect information?
Yes, non-compliance can lead to significant penalties. Failing to file, filing late, or providing false information can result in fines of up to $591 per day, with maximum penalties reaching $10,000 and potential imprisonment.
Timely and accurate filing is essential to avoid penalties.
How is my information kept secure and private once it’s filed with FinCEN?
FinCEN uses stringent security measures to safeguard BOI data. Only authorized government entities can access the information, and it is not available to the public, ensuring your sensitive information remains confidential.
What should I do if there’s a change in my beneficial ownership information?
Any changes in beneficial ownership must be reported within 30 days. This includes updates to the owners’ personal information, changes in ownership percentage, or shifts in management control. Staying up-to-date with changes is crucial to remain compliant.
Where can I find more resources or get help with BOI reporting?
Our Tax and Business advisors have compiled a list of resources that you can access here.
Additionally, if you need further guidance or help filing your company’s report, visit FinCEN’s website or reach out to a legal advisor. Wegner CPAs is unable to assist in filing.
