As of this writing, the BOI filing requirement for most businesses stands at January 13, 2025.
The CTA was introduced as part of the National Defense Authorization Act for Fiscal Year 2021 to combat illegal activities like money laundering, tax evasion, and terrorist financing. The law required businesses to disclose information about their “beneficial owners,” the individuals who own or control the company.
It is estimated that 32 million businesses would need to comply with the new reporting requirement.
What follows is some general guidance on the topic as we monitor the appeal and the approaching deadline. Please note that this information is for general purposes only and should not be applied to your specific situation without consulting legal professionals.
Which businesses must comply with the CTA’s BOI reporting requirement?
The CTA’s reporting requirements apply to both US and foreign businesses. US-based companies that need to comply include:
- Corporations
- Limited liability companies (LLCs)
- Other similar entities formed by filing with a state or tribal secretary of state or equivalent office
Foreign companies that must report under the CTA include:
- Corporations, LLCs, or similar entities formed under foreign laws and registered to do business in any US state or tribal jurisdiction.
Who is considered a beneficial owner?
A beneficial owner is any individual who directly or indirectly owns or controls at least 25 percent of the company. Even if someone doesn’t own any part of the company, they can still be considered a beneficial owner if they have substantial control over it.
Substantial control means the ability to direct or influence major decisions in the company, including senior officers, regardless of their formal title.
Who must file?
There are 23 exemptions from the reporting requirement, including:
- Publicly traded companies
- Banks and credit unions
- Securities brokers and dealers
- Public accounting firms
- Tax-exempt organizations
- Certain inactive entities
Also, large operating entities are exempt if they meet all these criteria:
- Employ more than 20 people in the United States
- Report gross revenues over $5 million on their latest tax return
- Are physically present in the United States
When must companies file?
The filing deadline depends on when the entity was formed or if there are changes to the beneficial owner’s information:
- Entities created in 2024 must file within 90 days.
- Entities created after December 31, 2024, must file within 30 days.
- Existing entities (created before January 1, 2024) must file by January 13, 2025.
- If there are changes or errors in previously reported information, the company must file within 30 days.
Risk of Noncompliance
Failing to comply with the BOI reporting requirement can result in criminal and civil penalties, including fines of up to $591 per day (up to $10,000) and potential jail time of up to two years.
For additional information, visit the FinCEN website’s Frequently Asked Questions page.
Erica Leavis is the director of Human Resources at CBS Medical Billing and Consulting and vice president, chief human resources officer of The Buzz HR.
