CTA Law

Who Can Be Liable for Violating BOI Reporting Requirements?

Question: Who can be held liable for violating BOI reporting requirements?

Answer: Both individuals and corporate entities can be held liable for willful violations. This can include not only an individual who actually files (or attempts to file) false information with FinCEN, but also anyone who willfully provides the filer with false information to report. Both individuals and corporate entities may also be liable for willfully failing to report complete or updated beneficial ownership information; in such circumstances, individuals can be held liable if they either [. . .]

What Are the Penalties for Violating BOI Reporting Requirements?

Question: What penalties do individuals face for violating BOI reporting requirements?

Answer: As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or [. . .]

What Happens if a Company Fails to File Its FinCEN BOI Report?

Question:  What happens if my company does not file its FinCEN BOI report within the required timeframe?

Answer:  If a person willfully fails to report complete or updated beneficial ownership information to FinCEN as required under the Corporate Transparency Act, FinCEN will determine the appropriate enforcement response in consideration of its published enforcement factors.

The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in [. . .]

What IDs are Acceptable on FinCEN BOI Reports?

Question:  What are some acceptable forms of identification that will meet the reporting requirement?

AnswerThe only acceptable forms of identification are:

  1. A non-expired U.S. driver’s license (including any driver’s license issued by a commonwealth, territory, or possession of the United States);
  2. A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;
  3. A non-expired passport issued by the U.S. government; or
  4. A non-expired passport issued by a foreign government [. . .]

What Applicant Information Is in a FinCEN BOI Report?

Question:  What information will a reporting company have to report about its company applicants?

Answer:  For each individual who is a company applicant, a reporting company will have to provide:

  1. The individual’s name;
  2. Date of birth;
  3. Address; and
  4. An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.

The reporting company will also have to report an image of the [. . .]

What is a FinCEN Report Applicant?

Question:  What is an applicant and when does a reporting company have to include applicant information in its FinCEN report filed under the Corporate Transparency Act.

Answer:  All reporting companies formed after 2023 must include applicant information in their FinCEN report.  Reporting companies formed before 2024 do not include applicant information in their FinCEN reports.

An applicant is individual who forms a reporting company by filing an application to form a corporation, limited liability company, or other similar entity under the laws of [. . .]

Who is the Beneficial Owner of a Company Owned by Another Company?

Question:  Homer Simpson and Marge Simpson own 25% of World Wide Widgets, LLC, as community property.  Ned Flanders, a single man, owns 75% of the LLC. World Wide Widgets, LLC, owns 100% of two subsidiary LLCs called Sub 1, LLC and Sub 2, LLC.  Which companies must file FinCEN reports and who is/are the beneficial owner(s) that must be named in the FinCEN report?

Answer:  Each company must file a FinCEN report.  Ned, Homer and Marge are all deemed to be beneficial owners of all three [. . .]

Kill Your Inactive Entities

Question:  I have an LLC that I formed years ago that is dormant.  It does not have any assets or get any income.  It is not operating a business.  Will my inactive LLC have to file a FinCEN report that contains beneficial owner information?

Answer:  Yes if it exists on January 1, 2025.  To avoid filing a FinCEN report and the CTA’s $500/day late filing penalty you should terminate/kill all inactive entities before January 1, 2025.

How to Terminate an AZ LLC or PLLC:  If [. . .]

FinCEN Extends Report Filing Deadline for Entities Formed After 2023

The following is the text of a November 29, 2023, FinCEN news release:

The Financial Crimes Enforcement Network (FinCEN) issued a final rule today that extends the deadline for certain reporting companies to file their initial beneficial ownership information (BOI) reports with FinCEN. Reporting companies created or registered in 2024 will have 90 calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial reports. FinCEN will not accept BOI reports from reporting companies [. . .]

National Small Business Administration Sues to Overturn the Corporate Transparency Act

National Small Business Administration Press Release, November 20, 2023

Huntsville, AL – Today, Nov. 20, at 10:00 a.m., oral arguments in National Small Business Association v. Yellen will begin at the Huntsville United States District Court. The case is a challenge to the constitutionality of the Corporate Transparency Act (CTA) and specifically the law’s beneficial ownershipreporting requirements. The law would require nearly every American who runs or wants to form a corporation or LLC to [. . .]

What Corporate Transparency Act Means for Small Businesses

The National Small Business Association (NSBA) on November 9, 2023, published a survey it conducted of small businesses regarding the Corporate Transparency Act.  The most startling statement in the survey is “The average small-business owner is looking at compliance costs for CTA of nearly $8,000 in the first year alone.”

Here are some of the interesting findings discussed in the survey:

  • 47% of small business owners are unaware of the CTA.
  • 48% said their business [. . .]

What is a FinCEN Identifier & How Can I Use It?

Question:  What is a FinCEN Identifier?

Answer: A “FinCEN identifier” is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN.

  • An individual or reporting company is not required to obtain a FinCEN identifier.
  • An individual or reporting company may only receive one FinCEN identifier.
  • Your company may include FinCEN identifiers in its BOI report instead of certain required information about beneficial owners or company applicants.

FinCEN’s Estimate of Time & Cost to File a FinCEN Report

Question:  How much time will I have to spend if I do a “do-it-yourself” FinCEN report?

Answer:  The following text is from a Notice by the U.S. Treasury Department on 09/29/2023.

  • FinCEN estimates that 32,556,929 entities will submit initial beneficial owner information reports (“BOIRs”) in Year 1 (2024).  In Year 2 (2025) and beyond, FinCEN estimates that the number of initial BOIRs filed will be 4,998,468 per year.
  • FinCEN estimates the average burden of reporting BOI as 90 minutes per response for [. . .]

Federal Government Incompetence with No End in Sight

The Corporate Transparency Act became a law on January 1, 2021.  The CTA provided that it would become effective January 1, 2022.  This law requires almost all existing companies formed in the United States since the U.S. became a country to file a report with the Financial Crimes Enforcement Network (FinCEN) that discloses information about each of the company’s “beneficial” owners.  A beneficial owner is a person, entity or trust that own 25% or more of the company or who has substantial control of the company.

These FinCEN [. . .]

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