Upcoming Beneficial Ownership Reporting Requirement under the Corporate Transparency Act (CTA)
Starting January 1, 2024, most U.S. entities must comply with the Corporate Transparency Act’s (CTA) Beneficial Ownership Information (BOI) reporting requirement, implemented by FinCEN to enhance financial transparency and combat crime. This requirement mandates corporations, LLCs, and similar entities to report information about their beneficial owners—individuals who hold significant control or at least a 25% ownership stake. Required disclosures include each beneficial owner’s name, address, date of birth, and a unique identification number, such as from a passport or driver’s license.
Entities that are newly formed or registered in 2024 in the U.S. must file their BOI reports within 90 days of creation (effective 2025 new entities will only have 30 days), while existing entities must comply by January 1, 2025.
Exceptions to the Requirement
There are several exceptions to the requirement, one common exemption is for a “Large Operating Company” which is a company with more than 20 full-time employees, gross receipts or sales over $5 million, and a physical presence in the U.S. Additionally, regulated entities like banks, publicly traded companies, and insurance companies are also excluded from the mandate.
Pending Legal Challenges
While the […]