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New Corporate Transparency Filing Regulations for Small Businesses
On January 1, 2024, new regulations under the Corporate Transparency Act (CTA) became effective, and many small businesses are now required to report ownership information to the government. Passed in 2021, the CTA is designed to track illicit activity, including tax fraud, money laundering and financing of terrorism.
Under the new regulations, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Enforcement Network (FinCEN). The Report requires providing details identifying individuals associated with the business. Any non-exempt entity created to do business in the U.S. needs to file the report, including corporations (both C and S), LLCs, LCPs, as well as foreign businesses that make a tax filing in any state. Some entities are exempt, including nonprofits (501(c)s), specific publically traded companies, and certain large operating companies.
Under the CTA, an individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. They are considered a beneficial owner if they have a major influence on the reporting company’s decisions or operations, own at least 25% of the company's shares, or have a similar level of control over the company's equity. Information such as full legal name, date of birth, home address and a form of identification such as a driver’s license or passport may be required.
For qualifying reporting companies established before January 1, 2024, the filing deadline is January 1, 2025. Those created between January 1, 2024, and January 1, 2025, will have 90 days from either the actual notice of formation or public announcement, whichever comes first, to file. Businesses established on or after January 1, 2025, will have 30 days from notification or public announcement of their formation to submit their first report to FinCEN.
While no annual reporting is required, companies will need to submit updates to their original filing when changes within their business occur. Minor changes can trigger this requirement, including a beneficial owner changing their address or name, or re-allocation of management responsibilities within the business.
If you are a client or have questions about the BOI, please contact our office at email@example.com or 914-617-7620 and we will direct your call so we can better serve you.