In 2021, Congress passed the Corporate Transparency Act, which creates a new beneficial ownership information reporting requirement for companies. This law is part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company. Companies required to report beneficial ownership information are called reporting companies. Most small to medium businesses are required to file their Beneficial Ownership Information Report (“BOIR”). 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies. The following table summarizes the 23 exemptions:
Exemption No. | Exemption Short Title |
---|---|
1 | Securities reporting issuer |
2 | Governmental authority |
3 | Bank |
4 | Credit union |
5 | Depository institution holding company |
6 | Money services business |
7 | Broker or dealer in securities |
8 | Securities exchange or clearing agency |
9 | Other Exchange Act registered entity |
10 | Investment company or investment adviser |
11 | Venture capital fund adviser |
12 | Insurance company |
13 | State-licensed insurance producer |
14 | Commodity Exchange Act registered entity |
15 | Accounting firm |
16 | Public utility |
17 | Financial market utility |
18 | Pooled investment vehicle |
19 | Tax-exempt entity |
20 | Entity assisting a tax-exempt entity |
21 | Large operating company |
22 | Subsidiary of certain exempt entities |
23 | Inactive entity |
If your company does fall under one of the exemptions, it must file a BOIR.
The following deadlines apply to reporting companies:
- A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
- A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
- A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.
A reporting company will have to report:
- Its legal name;
- Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
- The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters);
- Its jurisdiction of formation or registration; and
- Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).
A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.
For each individual who is a beneficial owner, a reporting company will have to provide:
- The individual’s name;
- Date of birth;
- Residential address; and
- An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document (for examples of acceptable identification, see Question F.5).
- The reporting company will also have to report an image of the identification document used to obtain the identifying number in item 4.
Failure to timely file the BOIR could result in civil or criminal penalties, including civil penalties of up to $591 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000.
If you would like help with filing of the BOIR, for a limited time, Rowley Chapman & Barney, Ltd. is offering BOIR-filing services for only $375.00. Please contact us right away at 480-470-0544 or at Zachary@azlegal.com to get started so that you are sure to meet the deadline.