Important Advisory - Corporate Transparency Act Reporting Requirements

January 2024

Dear Client:

This advisory is to alert you to a new, government mandated reporting requirement. The Corporate Transparency Act (CTA) was enacted by Congress in 2021 and went into effect on January 1, 2024. The stated purpose of the CTA is to combat the use of shell companies to engage in money laundering and other financial corruption by enhancing transparency about the ownership and control of certain businesses. The CTA requires the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) to establish and maintain a national registry of beneficial owners of many small to medium sized businesses. It is estimated that in 2024, 32 million small and medium sized businesses that employ fewer than 21 full-time employees and generate less than $5 million in annual revenue will be required to file a confidential online report known as the Beneficial Owners Information Report (BOIR) with FinCEN.

FinCEN is responsible for storing information that it collects pursuant to the CTA in a secure private database which will not be publicly available. The information is generally available only to federal law enforcement agencies and, with proper court approval, state, local and tribal law enforcement agencies.

While there are some exemptions to the reporting requirements of the CTA for certain large companies and government regulated entities (such as SEC and CFTC regulated entities, banks, insurance companies, and tax exempt non-profits), many limited liability companies, corporations and other entities are subject to the CTA’s online reporting requirements. Non-compliance with the CTA can lead to civil and criminal penalties, including fines up to $500 per day until the violation is remedied, or if criminal charges are brought, imprisonment for up to two years for individuals and fines up to $10,000 for companies.

The reporting deadlines vary depending on the business’s formation date. For companies in existence prior to January 1, 2024, the initial BOIR must be filed no later than January 1, 2025. For companies created on or after January 1, 2024, the initial BOIR must be filed within 90 days from the company’s official date of formation. Each BOIR must include identification information about the reporting company, its beneficial owners; and for companies created on or after January 1, 2024, details about a company’s applicants (e.g., the person who actually files the formation/registration papers and the person primarily responsible for directing or controlling the filing of the documents). Any changes to the information contained in the initial BOIR must be updated within 30 days from when the information becomes inaccurate. The filing of the initial BOIR and any changes thereto are the sole responsibility of the company.

Information about the reporting requirements, the BOI E-Filing System, and filing instructions are available on FinCEN’s beneficial ownership information webpage, www.fincen.gov/boi, including answers to frequently asked questions. We urge you to go to this webpage to review and understand your legal obligations to file the BOIR with FinCEN prior to the applicable deadline. If you have questions about the reporting requirements or need assistance with the online filing process, there are independent compliance service companies that, for a fee, can file and/or assist you in filing the BOIR with FinCEN. Set forth below is a list of a few of these independent service companies, but please understand that we do not endorse any of these service companies:

CSC
www.cscglobal.com
251 Little Falls Drive
Wilmington, DE USA 19808
Toll Free: +1 866 403 5272

FinCEN REPORT
www.fincenreport.com
1600 Parkwood Cir SE #200
Atlanta, GA 30339
hello@FincenREPORT.com
1-845-393-4623

WOLTERS KLUWER (CT CORPORATION)
www.wolterskluwer.com/en/know/beneficial-ownership-information-reporting

HARBOR COMPLIANCE
www.harborcompliance.com/beneficial-ownership-information-reporting-service

SECURE COMPLIANCE
www.securecompliance.us

NORTHWEST REGISTERED AGENT
www.northwestregisteredagent.com

USACORP
www.usacorpinc.com

FILEFORMS
www.fileforms.com

DISCLAIMER: THIS CLIENT ADVISORY PROVIDES A GENERAL SUMMARY OF THE CORPORATE TRANSPARENCY ACT AND ITS REQUIREMENTS AND IS NOT INTENDED TO, AND DOES NOT, PROVIDE LEGAL, COMPLIANCE OR OTHER ADVICE TO ANY INDIVIDUAL OR ENTITY. YOU ARE SOLELY RESPONSIBLE FOR COMPLYING WITH THE CORPORATE TRANSPARENCY ACT AND ITS REQUIREMENTS.