There are new reporting requirements under the Corporate Transparency Act (CTA) that may apply to your entity. The primary purpose of the CTA is to ensure US-based entities are not being used as instrumentalities for money laundering or other nefarious purposes. Although the constitutionality of the CTA is currently being challenged in several courts, it is in effect as of today.
The CTA requires certain LLCs, corporations, partnerships, trusts, and other legal entities to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury. For purposes of the CTA, a “beneficial owner” is generally defined as any person or entity that has requisite control over an entity’s decisions or affairs or owns at least 25% of a covered entity. A beneficial owner does not have to possess any ownership interest in the covered entity to be deemed a beneficial owner if that person or entity meets the requisite control test. As such, most covered entities may be required to file Beneficial Ownership Information Reports (BOIRs). The CTA contains a list of exemptions for certain entities from the BOIR requirement including for certain tax-exempt entities; however, it is our belief that most of our for-profit clients will not qualify for exemptions. Nevertheless, we will evaluate potential eligibility for exemptions for covered entities on a case-by-case basis.
The BOIR must provide certain information about the entity’s beneficial owners, including full legal name, birthdate, address, and an image of their driver’s license or passport. An entity created in 2023 or earlier must file the BOIR on or before January 1, 2025. An entity created in 2024 must file the BOIR within 90 days after the date of the entity’s creation. An entity created in 2025 or later must file the BOIR within 30 days after the date of the entity’s creation. The date of the entity’s creation is the date the entity receives actual or public notice that the entity’s incorporation or organization is effective with the applicable secretary of state’s office. Failure to comply with the CTA can result in civil fines and even criminal penalties.
Bailey Cavalieri will not file any BOIRs on behalf of any clients unless specifically authorized and engaged to do so. If you would like to authorize Bailey Cavalieri to file a BOIR on behalf of one or more entities, please email your attorney or CTA@baileycav.com. After we receive your authorization, we will send a follow-up communication to you outlining the information we need to file the BOIR.
If you do not authorize Bailey Cavalieri to file a BOIR, you will need to prepare and submit the report yourself or through another firm or registered agent. The CTA’s reporting requirements are mandatory.
Access and File BOI Report Here: https://boiefiling.fincen.gov/
If you have questions about the CTA and your entity’s reporting requirements, please do not hesitate to contact your attorney at Bailey Cavalieri to set up a meeting. If you would like Bailey Cavalieri to file your entity’s Beneficial Ownership Information Report, please let us know as soon as possible but in no event later than December 2, 2024.