The Corporate Transparency Act is a new law that went into effect January 1st, 2024, requiring almost all entities in the US to file Beneficial Ownership Information (“BOI”) on individuals who own substantial pieces of, or otherwise control the entity to the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). 

2. Did a court declare the Corporate Transparency Act unconstitutional? 

On March 1st,2024 a Federal District Court ruled that the Corporate Transparency Act was unconstitutional. 

However, do not misunderstand this ruling as a ban on the enforcement of the CTA. The court’s ruling prohibits CTA enforcement only against the National Small Business Association and its members.  All other entities are subject to the law and are required to file the BOI.  

3. When do I need to file my entity’s BOI? 

Entities formed after January 1st, 2024, will need to file BOI reports within 90 days following formation.  Entities that have been formed before January 1, 2024, including aged shelf companies, will need to file the initial reports by January 1st, 2025. 

4. What qualifies as a "reporting company"? 

The CTA defines a reporting company as any non-exempt entity created or registered to do business in the U.S. by the filing of a document with a Secretary of State or any similar office under the laws of a state or tribe (e.g., corporations, LLCs, and LLPs). Entities not created by such a filing, like many trusts, are not subject to the CTA. 

5. Who will be able to access the FinCEN BOI database? 

This information will be available to federal law enforcement agencies (including the Treasury and the IRS), and state and local law enforcement agencies with prior court approval. Foreign agencies may also ask for access to the information, either under an international treaty or as part of certain investigative procedures. Finally, financial institutions and their regulators may obtain access for purposes of satisfying their Know Your Customer requirements. These BOI filings will not be made available to the general public. 

6. Does this information have to be filed annually? 

No, but if an entity has a change of address, any owner’s address changes, ownership of the entity changes, or the entity’s exempt status changes, these changes must be reported within 30 days of any change. 

7. What is the punishment for not filing? 

The law sets forth multiple penalties for non-compliance, providing for both criminal and civil penalties.  Any individual who provides false information, or fails to report complete or updated information, is subject to a civil penalty of not more than $500 for each day that the violation continues, and may face fines of not more than $10,000, imprisonment for not more than two years, or both.   

8. How will aged entities be affected? 

Entities formed before January 1st, 2024, will have until December 31st, 2024, to report to the BOI database.