Understanding the new Beneficial Ownership Information Reporting requirement

The Corporate Transparency Act was passed by Congress in 2020 as a way to better detect and prevent money laundering, global terrorism, and other illicit activities. A new stipulation under this act, called Beneficial Ownership Information Reporting, is going into effect on January 1, 2024.

Here’s what you need to know…

What is Beneficial Ownership Information Reporting?

The primary goal of the Beneficial Ownership Information Reporting requirement is to collect more information about companies operating in the United States. Business owners will need to submit some basic information about the company, the beneficial owners (individuals who control or own at least 25% of the company), and, in certain cases, company applicants (individuals who initiated the filing of the initial company document).

Who Must Report This Information?

The Beneficial Ownership Information Reporting requirement applies to most corporations, LLCs, and entities that were either created in the United States or are registered to do business in the United States. There are a few exceptions such as banks, accounting firms, insurance companies, and tax-exempt businesses. FinCEN has put together a Beneficial Ownership Information Reporting FAQ page with a more comprehensive list of exemptions that you can find here.

What Information Is Required?

For the company itself, you will need to provide details like the business’s legal name, trade names (“Doing Business As” names), current address, location where the business was formed, and taxpayer identification number. For beneficial owners and company applicants, you will need to provide their legal name, date of birth, current address, and passport, state driver’s license, or other non-expired identification document.

How to Report this Information

The information must be submitted electronically on the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) webpage. The submission form will be available starting January 1, 2024. Businesses created or registered before that date will have until January 1, 2025, to file their first beneficial ownership information report. Businesses created or registered on or after January 1, 2024, must file within 90 days.

Failure to report before the deadline may result in civil and criminal penalties. There is no filing fee, and you will receive a confirmation of receipt after successfully submitting your information.

We understand that this is a lot of information and you may have questions. Feel free to reach out to us, and we can help you navigate this new reporting requirement or refer you to someone locally who can help!