BENEFICIAL OWNERSHIP INFORMATION (BOI) ARE BACK IN EFFECT
The Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA) are back in effect.
On February 18, 2025 the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of Treasure, et al., lifted the last remaining nationwide BOI injunction. As a result, all reporting companies must comply with their BOI reporting obligations.
New Deadline
FinCEN has extended the deadline 30 calendar days from February 19, 2025 for most companies. The new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025.
Background
The CTA, effective January 1, 2024, requires certain business entities (reporting companies) to report beneficial ownership information (BOI) to the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
Reporting Companies:
The CTA defines a “reporting company” as both:
- Domestic corporations, LLC’s, and other entities created by the filing of documents with a secretary of state or any similar office under the laws of a state of the U.S., the District of Columbia, an Indian tribe, or any other commonwealth, territory, or possession of the US; and
- Non-U.S. entities that are corporations, LLCs, or other entities; formed under the law of a foreign country; and registered to do business in any state or tribal jurisdiction by the filing of a documents with a secretary of state or any similar office under the law of a state or Indian tribe.
The CTA excludes from the reporting company definition 23 categories of entities. Many of these exemptions are for entities that are already subject to significant regulations by federal or state government agencies. The determination of whether an exemption applies can be complex, so we recommend contacting our office to confirm whether any of the applicable exemptions apply to any entity in which you own an interest.
Beneficial Owner:
A “beneficial owner” is any individual who, directly or indirectly, either:
- Exercises substantial control over the reporting company; or
- Owns or controls 25% or more of the ownership interests of the reporting company.
An individual exercise substantial control over a reporting company if the individual does any of the following:
- Servies as a senior officer;
- Has authority to appoint or remove certain officers or a majority of directors;
- Is an important decision-maker; or
- Has any other form of substantial control over the reporting company.
Company Applicants:
A “company applicant” is generally defined as, for domestic reporting companies, the individual that files the document forming the domestic reporting company; for foreign reporting companies, the individual that files the document that first registers the foreign reporting company in any state or tribal jurisdiction, and for both domestic and foreign reporting companies, 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.
Note: A reporting company is not required to report its company applicants if it was created or first registered in the U.S. before January 1, 2024.
Penalties:
There are both civil and criminal penalties for violating the CTA, including a fine up to $10,000, imprisonment for up to two years, or both, for any person willfully providing or attempting to provide false or fraudulent BOI; or failing to report complete or updated BOI to FinCEN.
Penalties may also apply to reporting companies and individuals who cause a reporting company not to report, or are senior officers of a reporting company at the time of its failure to accurately report or update BOI.
The BOI reporting requirements can be complex and legal guidance is strongly encouraged to ensure that any entity you own an interest in complies with the CTA requirements. Please reach out to us with any questions you may have about the CTA reporting requirements or to assist you with filing BOI reports for your entity.
