BOI reporting: The Corporate Transparency Act (CTA) was established as part of the Anti-Money Laundering Act of 2020. It establishes beneficial ownership information (BOI) reporting requirements. The goal is to prevent criminals from hiding or benefitting from illicit money or other property in the U.S. by using opaque business structures that make it difficult to determine the beneficial owners of such entities. In other words, the goal is to make it more difficult to launder money or hide money used to fund terrorism and other such activities.

Reporting companies are required to file the reports about their beneficial owners and applicants primarily include corporations, LLCs and other entities created by filing paperwork with a state’s secretary of state or similar. Some entities are exempted, and these generally include one of two types of entities: 1) Large operating companies with more than 20 employees and $5M+ gross income on the previous year’s tax returns, and 2) heavily regulated companies such as banks, governmental authorities, brokers in securities.

A Beneficial Owner is generally one of two flavors:

1. One who owns or controls at least 25% of the ownership interest of a reporting company, and

2. One who exercises substantial control over a reporting company such as: a) a senior officer (President, CFO, CEO, COO, General counsel etc.), or b) one who has any other form of substantial control over the reporting company, c) inactive entities (no income, no assets, no activity etc.) etc.

Beneficial owner exceptions generally include:

1. In general minor children (must provide parents info,

2. An employee of a reporting company acting solely as an employee and not a senior official.

A company applicant is the individual who directly files the document that creates a reporting entity, or the individual who is primarily responsible for directing such filings.

When the initial report is due depends on when the entity was formed. If it was formed:

  • Before Jan 1, 2024, it is due no later than Jan 1, 2025.
  • During 2024, it is due within 90 days after formation.
  • On or after Jan 1, 2025, it is due within 30 days of formation.

Updated or corrected reports are required when there is a change to previously reported information. It must be filed within 30 days after 1) a change is made, or 2) the reporting company becomes aware or has reason to know of an inaccuracy.

If a person willfully files false or fraudulent info or fails to report complete or updated beneficial ownership info: A civil penalty of no more than $500/day ($10k max), nor more than 2 years imprisonment, or both. However, they are not subject to the penalty if the person voluntarily and promptly submits a corrected report no later than 90 days after submission, unless the person acted with intent to evade the requirements and had actual knowledge that any report information is inaccurate.

If the IRS or state claims you owe $35,000 or more in back taxes, penalties, and interest, contact our office today for a free, no-obligation consultation with a tax relief expert to review your options and secure your financial future. Missed deadlines limit your options. so don’t ignore those notices. The sooner you get help the better. Your journey to back tax relief begins here.