Heard about the New Corporate Transparency Act? What’s your BOI?
Have you heard about the new Corporate Transparency Act, that requires you to report your company’s BOI? Beginning on January 1, 2024, corporations, limited liability companies (LLCs), and any other business entities that were created by filing a document with a State are now required to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).
We are already hearing about phishing scams that try to use this new law to gain your personal information. Please read the information below and contact us for guidance on meeting the new requirements.
What is this new law all about?
In 2021, Congress enacted the Corporate Transparency Act (CTA), which created a beneficial information reporting requirement, which is now being put into effect. The reporting requirement seeks to identify shell companies and other illegal entities to help ensure that companies are legitimate entities.
Who is a beneficial owner?
At the risk of oversimplifying a complicated law, a beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the company or (2) owns or controls at least 25% of the company’s ownership interests.
You may have more than one beneficial owner. Your business law attorney can analyze your business structure to identify the beneficial owners. BOI stands for beneficial owner information.
How long will it take me to file?
The Journal of Accountancy reports that the average burden time for a filing is 90 minutes. This is one of several reasons why you should work with your business attorney to quickly and efficiently file by providing your attorney with information as part of your annual business meeting.
When should I report?
Reports will be accepted starting on January 1, 2024. But don’t be too hasty in registering - the Harris-Pero Law team is prepared to assist you. With our valuable guidance, we can help you register correctly to avoid fines and limit the administrative burden of future changes to your information.
If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025 to report BOI. For any such business, it is best to work with your business law attorney to register as part of your annual meeting in 2024.
If your company was created or registered on or after January 1, 2024, and before January 1, 2025, you must report BOI within 90 calendar days after receiving notice that its creation or registration is effective, whichever is earlier. Many law firms like ours are beginning to assist clients with new formations with their registrations.
If your company was created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving notice that its creation or registration is effective.
What happens if I do not report my BOI? Why should I care?
The CTA includes civil penalties of up to $500 per day that the violation of the CTA continues. You may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000.
I received a notice in the mail, should I fill it out?
Beware of scams regarding BOI Registration. In particular, the Better Business Bureau and our clients have reported receiving a form in the mail that looked official. Beware of registration companies that use public information to target you to pay them to file. They may not actually file or may file incorrectly. FinCen has also posted a notice on their website regarding these scams. Never scan a QR code from a form received in the mail about this registration.
Do I have to report annually?
No, only an initial report is required, unless there are updates or corrections to be made. If there is a change, a new report should be filed within 30 calendar days of the change to avoid fines. If you have more than one business entity we strongly advise you work with your business law attorney on your registration to assist you in registering so that if you have a change in your personal BOI it can be made once in the system to update your information for all of your entities. This can save you from future administrative nightmares!
What information gets reported about beneficial owner(s)?
(1) Name
(2) Date of Birth
(3) Residential Address
(4) Driver’s License or State Issued ID number; or Passport number
What information gets reported about the company itself?
(1) Its legal name
(2) Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
(3) The current street address of its principal place of business
(4) Jurisdiction of formation or registration
(5) Taxpayer Identification number
Shouldn’t my tax advisor help me with this?
When changes in law come out, it is often a grey area about who should assist you: your tax advisor or attorney. Most legal and tax associations are coming out with opinions that registration is “legal work, not tax work” because who you register may be an issue of legal analysis.
Failure to register also involves severe fines and many professionals want to avoid liability for those fines. As a result, many tax advisors are informing clients of the requirement but leaving it up to the client to register. The Harris-Pero Law Firm is helping clients who want assistance with initial registrations and communicating with tax advisors to keep them informed.
Should I be worried about giving personal information to the Federal government regarding my company and beneficial owners?
No. If you have created a business entity, your attorney should have filed for and received an Employer Identification Number (EIN) through the Internal Revenue Service (IRS). As part of that application the same information information with the addition of a beneficial owner’s social security number in obtaining the EIN. The information shared with FinCen is not much different.
Additionally, the information collected by FinCEN is currently not public information and will only be accessible by federal or state officials under limited circumstances. FinCEN is currently seeking public comments on the administrative burden and cost of the process allowing state, local governments and tribal agencies with access to BOI.
We understand this information may seem overwhelming. The Harris-Pero Law Firm team is prepared and equipped to help you and your company navigate this change and assist you in filing your BOI report. Contact us today at 518-860-5668 or info@saratogawills.com
with questions or to schedule a time to speak with an attorney.