Introduction

Starting January 1st, 2024, the Corporate Transparency Act (CTA) brought significant changes to reporting requirements for registered businesses in the United States. Enacted by Congress to combat illicit activities such as tax fraud, money laundering, and terrorism financing, the CTA requires U.S. small business owners meeting certain criteria to file a Beneficial Ownership Information (BOI) report to the Financial Crimes Enforcement Network (FinCEN). As the submission deadline of January 1st, 2025 looms, this white paper aims to provide key information on the act’s background and offer small business owners clarity on maintaining compliance.

Background

The CTA was passed as part of a larger reform bill called The National Defense Authorization Act of 2021. At the time, CTA was not the main focus: other provisions, such as advancing AI R&D, allocating $740 billion to the Pentagon, and renaming military bases previously named after Confederate leaders garnered most of the attention among Congressmen. Nonetheless, the act was consequential as it meant the creation of a federal database tracking the beneficial ownership of U.S entities, enhancing business transparency and empowering the government to better detect and investigate concealed financial crimes. However, amid global and domestic issues such as the unprecedented COVID-19 pandemic and a post-election America, the act went under the radar of lawmakers and small business owners alike. Since put into effect on January 1, 2024, though, the act has required 30 million businesses to understand and comply with Beneficial Ownership Information (BOI) filing requirements or face harsh penalties, including daily fines of $500, fines of up to $10,000, and up to 2 years in jail.

Understanding Key CTA Terms

• Reporting Company includes corporations, LLCs, or similar entities registered to the business in The United States by filing a document with the Secretary of State. Thus, they are required to file a BOI report. However, 23 types of entities outlined in FinCEN’s Small Entity Compliance Guide are exempt from filing.
• Beneficial Owners are individuals who, directly or indirectly, have substantial control over a reporting company or own at least 25% of its ownership interests. Indirect ownership can take various forms, including convertible instruments, capital or profit interests, and equity or stock holdings.
• A company applicant is either: a) The individual who directly files the document that creates or registers the entity, or b) The individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.

(Photo Illustration By NAIOP) https://www.naiopmd.org/news/what-to-know-about-the-corporate-transparency-act/

Reporting Requirements

Reporting companies must provide the following information about its company:

• Legal name
• Trade names
• Current U.S. business address:
  • Principal place of business for U.S.-based companies
  • Address of U.S. operations for foreign companies
• Jurisdiction information
• IRS taxpayer identification number (EIN / TIN).

Reporting companies must provide the following information about beneficial owners and company applicants:

• Legal name
• Date Of Birth
• Current Address
• An identification document with a unique identifying number, name of the state or jurisdiction that issued the acceptable identification document, and an image of the acceptable identification document.

Who can access my BOI report?

In its “Access Rule,” FinCEN has outlined the following recipients authority access a company’s BOI reports:

• Federal law enforcement agencies
• State, local, and tribal law enforcement agencies with court authorization
• Financial institutions, with customer consent, for customer due diligence purposes
• Federal functional regulators and other appropriate regulatory agencies
• Foreign law enforcement agencies, via requests made by U.S. federal agencies
• U.S. Treasury Department officials for tax administration

Solution

Beneficial Ownership Information (BOI) reporting can be a headache for businesses, but it doesn’t have to be. Occams Advisory is here to simplify the process and ensure you’re in compliance. Our expert team will guide you through every step, from collecting the necessary information to submitting your report.

With Occams Advisory, you can rest easy knowing that your BOI reporting is accurate and secure. We verify all details to meet FinCEN’s standards, so you can avoid costly penalties.

Ready to file your BOI report? Contact Occams Advisory today: https://boireporting.io/

Sources/Citations

1. Karlton Dennis. (2023, August 21). Corporate Transparency Act explained | What you need to know [Video]. YouTube. https://www.youtube.com/watch?v=voLB8Z2dHoI

2. Corporate Direct. (2023, November 7). Why was the Corporate Transparency Act passed? [Video]. YouTube. https://www.youtube.com/watch?v=jT4-Bas-mqo

3. The Corporate Transparency Act: What you need to know | Nixon Peabody LLP. (2024, May 14). Nixon Peabody LLP. https://www.nixonpeabody.com/insights/alerts/2024/05/14/the-corporate-transparency-act-what-you-need-to-know

4. Fain, S. (2024, February 12). New reporting requirements may affect your business: An overview of the Corporate Transparency Act. Spotts Fain. https://www.spottsfain.com/our-insights/blog/new-reporting-requirements-cta
Beneficial Ownership Information | FinCEN.gov. (n.d.). https://www.fincen.gov/boi-faqs

Written by Veer Agarwal

Veer Agarwal studies at Livingston High School in the United States.

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This blog is intended for informational purposes only and should not be considered as any professional advice. Please consult with the respective professional for any specific advice related to your situation.  

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