Corporate Transparency Act: Shruti Gurudanti, Rose Law Group partner and director of corporate transactions, outlines what you need to know

Effective January 1, 2024, domestic and foreign “reporting companies” are required to file a Beneficial Ownership Information Report (BOI Report) with FinCEN containing information on:

1. Beneficial Owners;

2. Company Applicants (only for “reporting companies” created after January 1, 2024); and

3. The “reporting company” itself.

Who Must File?

All “Reporting Companies” (domestic and foreign) unless an exemption applies.

· Domestic Reporting Company: any corporation, LLC, LPs or other entity created by filing a document with the secretary of state or similar office in any state or territory or with a federally recognized Indian Tribe.

· Foreign Reporting Company: any corporation, LLC or other similar entity formed under the laws of a foreign country and registered to do business in the United States.

Who is Exempt?

There are 23 exemptions. With the following being the most notable ones:

· Exemptions may apply for entities subject to substantial federal or state regulation such as, public companies, registered broker-dealers, registered investment companies or investment advisor, Venture capital fund advisers, insurance companies, accounting firms, banks and credit unions,

· Tax-exempt entities

· “Large operating companies”

· “Inactive entities”

· “Wholly-owned or controlled subsidiaries of certain exempt entities”

Please reach out to us so we can determine whether an exemption applies to you.

Information Required for Reporting

· The business’s full legal name, trade names, current address, jurisdiction of formation, and taxpayer identification number.

· Details about the business’s beneficial owners; individuals with significant control or ownership of the business.

· Full legal name, Date of birth, Current address, ID

· Company applicants (those responsible for creating the entity)

Filing Deadlines and Updates

The deadlines for filing BOI reports vary based on the creation date of the reporting company.

· Entities created before January 1, 2024, must file by January 1, 2025.

· Entities created after January 1, 2024 and before December 31, 2024 must file within 90 days from the date creation.

· Entities created after January 1, 2025 must file within 30 days from the date of creation.

· Subsequent updates or corrections must be filed within 30 calendar days of any changes to the reported information, including alterations in beneficial ownership or eligibility for an exemption. It is crucial that all business owners adhere to these timelines in order to avoid penalties associated with non-compliance.

Non-Compliance & Penalties

Failing to comply, or willfully providing false or fraudulent reports can result in:

· Civil fines of $500 a day for as long as the reports remain inaccurate.

· Failure to comply may also subject the violators to the criminal penalties of a $10,000 fine or 2 years in jail.

Filing Process and Confidentiality

BOI reports, updates, and corrections are submitted electronically to FinCEN through their website ( Business owners are also able to obtain a unique FinCEN Identifier for identifying purposes. Furthermore, it is essential to understand that FinCEN can disclose BOI information to specific entities, including federal agencies, state law enforcement with a court order, financial institutions with consent, and certain foreign authorities.

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February 2024