Beneficial Ownership Information reporting required under the Corporate Transparency Act

Pursuant to the Corporate Transparency Act (the “CTA”), beginning on January 1, 2024, many companies in the United States (the “Reporting Companies”) are required to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company (the “BOI report)”.

The information must be reported electronically to the Financial Crimes Enforcement Network (FinCEN), through a secure filing system available via FinCEN’s BOI E-Filing website. Those needing assistance with this process or understanding their legal obligations should contact their legal advisors.

Reporting Companies include (1) domestic reporting companies that are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States and (2) foreign reporting companies that are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

Accompanying regulations provide a list of 23 types of entities that are exempt from the reporting requirements, including, but not limited to federal, state, and municipal government authorities, banks, credit unions, depository institution holding companies, broker dealers, investment companies and investment advisors as defined in the Investment Company Act of 1940, pooled investment vehicles that are operated or advised by certain categories of entity that are exempt under these regulations, as well as, notably, large operating companies. A large operating company is defined as any entity that employs more than 20 full time employees in the US, has an operating presence and physical presence in the US, and has at least $5M in US-sourced gross receipts reflected on its tax return for the previous year.

The following deadlines are applicable:

  • Companies created or registered to do business in the US before January 1, 2024 must file the BOI report by January 1, 2025
  • Companies created or registered on or after January 1, 2024 and before January 1, 2025, have 90 calendar days after receiving actual or public notice that their creation or registration is effective to file their initial BOI reports.
  • Companies created or registered on or after January 1, 2025, will have 30 calendar days from receipt of actual or public notice that their creation or registration is effective to file their initial BOI reports.

Importantly, the willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in civil or criminal penalties, including civil penalties of up to $500 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. Senior officers of an entity that fail to file a required BOI report may be held accountable for that failure. 

Please contact your Mazars USA LLP professional for any factual information we may have on file, which may assist you and/or your legal advisor, in completing any required filings. 

The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.