As we approach the filing deadline for the Beneficial Ownership Information (BOI) report under the Corporate Transparency Act (CTA), we wanted to send you this important reminder. The due date for filing is quickly approaching, and it is critical to ensure that you comply with this new requirement, if applicable. This article provides general information about who is required to file, who is exempt, and information you’ll need to complete the filing.
Who is Required to File?
If your business is a domestic or foreign entity that is registered to do business in the U.S., you may be required to file a BOI report. Most corporations, limited liability companies (LLCs), and similar entities are subject to the filing requirement, unless they qualify for an exemption.
LLCs, particularly disregarded entities (entities with a single owner, such as single-member LLCs), are among the most likely to be required to file due to their common structure and lack of exemption status in many cases. It is important to assess whether your LLC or disregarded entity meets the criteria for filing based on ownership and control.
Who is Exempt from Filing?
While many entities will be required to file, there are 23 exemptions outlined under the CTA. These exemptions generally apply to larger, regulated, or inactive entities. Below is a summary of the most common exemptions that could be applicable to DZA clients. (For a full list of the exemptions, please click on the FAQ link below.)
Commonly Exempt Entities
- Large operating companies: Entities that have more than 20 full-time employees, more than $5 million in gross receipts or sales, and a physical office in the U.S.
- Inactive entities: Entities that have been in existence for more than one year but have no active business operations or substantial assets (e.g., dormant companies).
- Wholly owned subsidiaries: A company that is 100% owned by an exempt entity and has no independent operations.
- Subsidiaries of exempt entities: Companies that are directly controlled by an exempt entity, as long as the parent entity is already reporting BOI.
- Non-profit organizations: Entities recognized as tax-exempt under section 501(c) of the Internal Revenue Code.
- Governmental entities: Entities that are owned or controlled by the U.S. government, state governments, or foreign governments.
Filing Due Date
For entities formed or registered before January 1, 2024, the BOI filing is due by January 1, 2025. If your entity was formed during 2024, your filing will be due within 90 days of formation or registration. If your entity was formed on or after January 1, 2025, your filing will be due within 30 days of formation or registration. Any updated reports are due within 30 days.
What You Need to Report
The BOI filing requires disclosure of beneficial owners (individuals who directly or indirectly own or control the entity). This includes:
- Full legal names
- Birthdates
- Residential addresses
- Unique identifying numbers (e.g., from a passport, driver’s license, or other government-issued ID)
To complete the filing, the Financial Crimes Enforcement Network (FinCEN) requires that each beneficial owner provides a government-issued identification number (such as from a passport or driver’s license) and uploads a clear copy of the ID used. This identification will help verify the owner’s identity. In cases where an individual holds more than one government-issued ID, the most current document must be submitted.
Resources
You are responsible for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership information. BOI reports will be filed with FinCEN. Helpful links related to the BOI reporting requirements follow:
- Small Entity Compliance Guide | FinCEN.gov (Guidance)
- FinCEN has a Frequently Asked Questions page (FAQs)
- Beneficial Ownership Information Reporting | FinCEN.gov (Where to File)
We understand that these filing requirements can be complex and penalties for noncompliance with CTA can be significant. We recommend consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements and issues surrounding the collection of relevant ownership information.
Thank you for your attention to this important matter. Please reach out to your DZA representative with any questions.
