New FinCEN Reporting Obligations for Beneficial Ownership Information
(Effective January 1, 2024)

Starting in 2024, a major shift is coming for many businesses due to the Corporate Transparency Act (CTA), which became law as part of the National Defense Act for Fiscal Year 2021. This act requires that about 32.6 million businesses disclose who really owns and controls them — this is known as Beneficial Ownership Information (BOI).

The main goal of the BOI reporting is to help the U.S. fight against money laundering, terrorism financing, and other illegal activities. It's important to note that this isn't about taxes. The CTA is linked to the Bank Secrecy Act, which focuses on keeping track of and reporting certain financial dealings. Instead of reporting to the IRS, businesses will send their BOI reports to the Financial Crimes Enforcement Network (FinCEN), a part of the Department of Treasury.

This doesn't impact your taxes; it's simply a NEW reporting requirement.

Here's what you need to know about this change:

  1. If your business entity (LLC, Corporation, etc.) was established BEFORE January 1, 2024, you are required to submit a BOI report by January 1, 2025.

  2. For entities formed ON OR AFTER January 1, 2024, the BOI report must be filed within 90 days of their registration or formation with the Secretary of State's office.

  3. The rule exempts 23 specific types of entities and certain large corporations, as outlined in the Small Entity Compliance Guide provided by FinCEN.

Note: Should you need assistance in filing these reports, please contact CorpNet here.

Here's how you can get this done:

  1. Prepare the forms yourself on the FINCEN website

  2. Hire a third party to handle it for you for a few hundred dollars.

Reporting Companies Under the Corporate Transparency Act

The Corporate Transparency Act categorizes reporting companies into two groups: domestic and foreign.

  • A "domestic reporting company" refers to entities such as corporations, limited liability companies (LLCs), or other similar organizations established through filings with a secretary of state or an equivalent office under state or tribal laws.

  • On the other hand, a "foreign reporting company" is defined as a corporation, LLC, or similar entity formed under foreign country laws but registered to operate in any state or tribal area. This registration typically involves filing documents with a secretary of state or an equivalent office.

For both types of companies, the following information is necessary for reporting:

  • Legal Name and Any Trade Names Used

  • The Complete Current Address of the Company

  • The Jurisdiction Under Which the Company Was Formed

  • The Company's IRS Taxpayer Identification Number (TIN)

Understanding Exemptions from Filing Requirements

Who is Exempt?

  • Specific Categories: There are 23 distinct categories exempt from filing. This includes:

    • Publicly traded companies

    • Banks and credit unions

    • Securities brokers/dealers

    • Public accounting firms

    • Tax-exempt entities

    • Certain inactive entities, among others.

Conditions for Exemption

  • Not Automatic: These exemptions are not automatic. Many of these entities are already under strict government regulation and typically disclose their BOI to a governmental body.

Exemption for Large Operating Entities

  • Criteria for Large Entities:

    • Employ over 20 people in the U.S.

    • Report over $5M in gross revenue or sales on the previous year's tax return.

    • Maintain a physical presence within the U.S.

Information Required from Beneficial Owners Under the Corporate Transparency Act

The Corporate Transparency Act defines a beneficial owner as any individual who, directly or indirectly:

  • Has substantial control over a reporting company.

  • Owns or controls at least 25% of the ownership interests in a reporting company.

FinCEN has provided definitions for both substantial control and ownership interest, catering to various organizational structures. For companies with straightforward organizational setups, which FinCEN anticipates will be the case for most, identifying and reporting beneficial owners should be relatively easy.

The information required from beneficial owners is somewhat different and includes:

  • Legal Name and Any Trade Names

  • Date of Birth

  • Current Full Residential Address

  • A Unique Identifying Number from an official document like a passport or driver's license, along with the document's issuing jurisdiction.

  • An Image of the Document from which the Unique Identifying Information was sourced.

Compliance Penalties and Filing Deadlines

Penalties for Non-Compliance

  • Strict Penalties: Failing to comply or making unauthorized disclosures incurs severe penalties.

  • Daily Fines: There's a $500 daily civil penalty for continuous non-compliance.

Filing Requirements

  • Filing Deadline: The deadline to complete and submit the form is January 1, 2025, giving you about a year from now.

  • Ease of Filing: While filling out the form isn't overly complicated, it's crucial that it's done correctly and on time.


We will continue monitoring FinCEN's updates and ensure you're informed about new guidelines.

Important note: FinCEN will not send unsolicited requests for information. Be cautious of any unexpected communications claiming to be from FinCEN, especially if they ask for information or include links or QR codes, as these could be fraudulent.