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Frequently Asked Questions

Corporate Transparency Act

What is the Corporate Transparency Act?

Enacted as a part of the Anti-Money Laundering Act of 2020 in the National Defense Authorization Act for Fiscal Year 2021, the Corporate Transparency Act (CTA) ordered the Financial Crimes Enforcement Network (FinCEN) to establish a database for collecting and maintaining the Beneficial Ownership Information (BOI) of domestic and foreign entities that are registered to do business in the United States.

Complying with CTA requires a reporting company to submit BOI Reports directly to FinCEN.

Both domestic and foreign businesses formed before January 1, 2024 will be required to submit their BOI Report no later than January 1, 2025. New businesses, formed on or after January 1, 2024, will have 90 calendar days to submit their BOI Initial Reports to FinCEN.

For a full rundown on everything Corporate Transparency Act, visit What is a Beneficial Ownership Information Report? New Rules for Business Owners.

Who is FinCEN?

The Financial Crimes Enforcement Network, or FinCEN, operates as a branch of the United States Department of the Treasury, dedicated to fighting financial crimes domestically and globally. These crimes include activities such as money laundering, terrorist activities, and other financial crimes.

Under The Corporate Transparency Act, it is FinCEN’s responsibility to gather Beneficial Ownership Information of companies doing business in the U.S. and maintain the information within a confidential database. In doing so, FinCEN is enhancing transparency and accountability in the business landscape, making it harder for bad actors to hide and move money through anonymous shell companies and other corporate structures for illegal purposes.

For more in-depth information about FinCEN’s role and initiatives, explore What is FinCEN and BOIR?

Which Companies are Affected by the Corporate Transparency Act?

The Corporate Transparency Act requires any business entity, created by filing a document with the Secretary of State or similar office, to provide Beneficial Ownership Information to FinCEN. This can include:

LLCs;

Corporations;

Limited Partnerships;

Other similar entities.

Foreign business entities that register to do business in a U.S. State or Territory are also required to file BOI Reports to FinCEN.

What is Beneficial Ownership Information?

Beneficial Ownership Information refers to identifying information about the individuals who directly or indirectly own or control a company. Required Beneficial Ownership Information for each beneficial owner includes:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document (driver’s license, passport, or government-issued ID);

• An image of the ID document.

For step-by-step guidance to Beneficial Ownership Information Reporting, visit A Complete Guide To BOIR.

Penalties

What Are the Penalties for Non-Compliance With the Corporate Transparency Act?

An individual or company who violates the Beneficial Ownership Information (BOI) Reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues.

Individuals 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 BOI Report, willfully filing false or inaccurate BOI, or willfully failing to correct or update previously reported BOI.

Read Corporate Transparency Act Penalties: What You Need To Know for an in-depth analysis on CTA penalties and tips to stay in compliance.

What if a Beneficial Owner Withholds Information?

The bottom line is that business owners and senior officers are responsible for accurate and timely reporting. Adopting a company compliance policy may help ensure that potential beneficial owners will understand their obligation to report personal information to FinCEN.

If one beneficial owner has failed to file a BOI Report, senior officers as well as the non-compliant beneficial owner may be subject to penalties due to willful noncompliance.

Timing

When Does the Corporate Transparency Act Take Effect?

Starting January 1, 2024, the Corporate Transparency Act (CTA) comes into effect, introducing reporting requirements for businesses.

Existing businesses formed before January 1, 2024, must file Beneficial Ownership Information Reports with FinCEN by January 1, 2025, to be in compliance with the law.

For new businesses formed on or after January 1, 2024, submitting Beneficial Ownership Information Reports to FinCEN is required within 90 days of the company’s formation date. Meanwhile, for those formed on or after January 1, 2025, the deadline shortens to 30 days from the company’s date of formation.

Companies subject to reporting can commence filing from January 1, 2024. Stay informed and ensure timely compliance with the new regulations.

How Often Does a Reporting Company Need to File a Report with FinCEN?

If the reporting company or its beneficial owners have any changes in information from what was initially reported, the reporting company must file an updated BOI Report within 30 calendar days from the time of the change.

A reporting company is not required to file an updated report for any changes to previously reported information about a company applicant.

Reporting Requirements

What is a Reporting Company?

Domestic reporting companies include any corporation, limited liability company, or similar entity created in the United States through the filing of a document with a Secretary of State or similar office, that does not qualify for any of the exemptions provided under the Corporate Transparency Act.

Foreign reporting companies are any legal entity that has been registered to do business in the United States by the filing of a document with a Secretary of State or similar office that does not qualify for any of the exemptions provided under the Corporate Transparency Act.

See Which Businesses Need To File BOIR? Reporting Companies Explained. for more.

Who Should be Reported for Companies Formed Before January 1st, 2024?

Existing companies formed before January 1, 2024, need to report the following to FinCEN:

• Beneficial Owners

• Control Parties

• Reporting Company Information

 

For each beneficial owner and control party, a reporting company needs to provide its:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document;

• An image of the ID document.

 

The following information about the reporting company itself also needs to be provided:

• Reporting company full legal name (with corporate ending);

• Jurisdiction (state of formation, incorporation, or registration);

• Principal business address (NOT the registered agent address);

• Federal tax ID number (EIN or ITIN);

• All trade names or DBAs.

 

*Foreign Reporting Entities are also required to report the Jurisdiction of first registration

Who Should be Reported for Companies Formed On or After January 1st, 2024?

Starting January 1, 2024, newly formed companies will need to report the following to FinCEN:

• Beneficial Owners

• Control Parties

• Company Applicants

• Reporting Company Information

 

For each beneficial owner, control party, and company applicant, a reporting company needs to provide its:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document;

• An image of the ID document.

 

The following information about the reporting company itself also needs to be provided:

• Reporting company full legal name (with corporate ending);

• Jurisdiction (state of formation, incorporation, or registration);

• Principal business address (NOT the registered agent address);

• Federal tax ID number (EIN or ITIN);

• All trade names or DBAs.

 

*Foreign Reporting Entities are also required to report the Jurisdiction of first registration

What are Acceptable Forms of Identification Documents?

Typically, acceptable forms of identification are limited to:

• A non-expired U.S. driver’s license (including any license issued by a commonwealth, territory, or possession of the United States);

• A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;

• A non-expired passport issued by the U.S. government; or

• A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).

Does the Activity or Revenue of a Company Determine Whether it has to Report or Not?

An entity’s activities and revenue could qualify the entity for one of the exemptions. For example, a company that reported more than $5 million in gross receipts or sales in the previous year and satisfies other exemption criteria could be an exempt entity. See the Large Operating Company exemption for more details.

Can a Reporting Company Report a P.O. Box as Its Current Address?

No, the reported address must be a U.S. street address and cannot be a P.O. box.

Can a Reporting Company Use a Registered Agent as its Current Address?

No, the reported address must be a U.S. street address of the reporting company’s principal place of business.

Has a Company met FinCEN's Reporting Requirement if it has Filed a Form or Report That Provides Beneficial Ownership Information to a State Office, Financial Institution, or the IRS?

No, reporting companies will need to report Beneficial Ownership Information Reports directly to FinCEN.

Exemptions

Are any Companies Exempt From Beneficial Ownership Reporting?

FinCEN has declared some companies exempt from the Beneficial Ownership Information Reporting requirements. There are 23 types of businesses that are exempt from the Corporate Transparency Act. Most of the businesses that are exempt from BOI Reporting are already registered with a regulatory or government agency. A few examples of exempt businesses include:

• Dormant or inactive companies;

• Large operating companies;

• 501(c)(3) non-profit organizations;

• Publicly traded companies;

• And more.

For a complete list of exemptions, visit Who Doesn’t Report BOI? FinCEN BOIR Exemptions Explained. 

Does an Exempt Company Need to Report its Exemption Status to FinCEN?

A company does not need to report to FinCEN that it is exempt from the Beneficial Ownership Information Reporting requirements if the entity has been exempt since its inception.

However, if a reporting company files a Beneficial Ownership Information Report but becomes exempt from filing, the company should file an updated report. An updated BOI Report for a newly exempt entity will only require that (1)The entity identifies itself and (2)Check a box on the report noting its newly exempt status.

Are Publicly Traded Companies Exempt?

Entities already subject to regulatory ownership reporting requirements, such as publicly traded companies registered under the Securities Exchange Act, among others, are generally exempt from CTA reporting.

Read Who Doesn’t Report BOI? FinCEN BOIR Exemptions Explained. for more information on exempt entities.

What is the Large Operating Company Exemption?

A large operating company can qualify for exemption by meeting all of the following six requirements:

• Employs more than 20 full-time employees;

• Has more than 20 full-time employees employed in the United States;

• Has an operating presence at a physical office within the United States;

• Reported more than $5,000,000 in gross receipts or sales on its last federal income tax return in the United States;

• Reported more than $5,000,000 as gross receipts or sales on the entity’s IRS Form;

• When gross receipts or sales from sources outside the United States are excluded, the amount remains greater than $5,000,000.

To see if your business meets the requirements for another exempt entity, visit Who Doesn’t Report BOI? FinCEN BOIR Exemptions Explained.

Is a Reporting Company Exempt if it Meets 2 of the 6 Criteria for Large Operating Companies?

Companies that meet only one or two of the criteria listed under “What is the Large Operating Company Exemption?” are not exempt from the Corporate Transparency Act and need to file Beneficial Ownership Information Reports.

Can a Company Consolidate Employees from its Subsidiaries to Meet the Large Operating Company Exemption Criteria?

Consolidation of employees across affiliated entities will not be allowed by FinCEN.

Can Gross Receipts be Consolidated Among Related Companies?

For an entity that is part of an affiliated group of corporations that filed a consolidated return, the applicable amount is the amount reported on the consolidated return for the group. The entity must have reported this greater-than-$5 million amount as gross receipts or sales (net of returns and allowances) on the entity’s IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120-S, IRS Form 1065, or other applicable IRS forms.

Can a Disregarded Entity Qualify as a Large Operating Company?

No, a disregarded entity (DRE) cannot qualify for the Large Operating Company Exemption itself. Even if the income of a disregarded entity is reported on a parent company’s U.S. federal income tax return, the disregarded entity doesn’t file its own U.S. federal income tax return.

Can Seasonal Companies Qualify for the Large Operating Company Exemption?

Typically, a reporting company can only be considered a large operating company during the period when the company meets all the listed requirements of a large operating company.

What is the Inactive Company Exemption?

According to FinCEN, an entity is considered inactive and exempt from filing only if all six of the following criteria apply:

• The entity was in existence on or before January 1, 2020;

• The entity is not engaged in active business;

• The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially;

• The entity has not experienced any change in ownership in the preceding twelve-month period;

• The entity has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding twelve-month period;

• The entity does not otherwise hold any kind or type of assets including any ownership interest in any corporation, limited liability company, or other similar entity.

Visit Who Doesn’t Report BOI? FinCEN BOIR Exemptions Explained. to see if your business qualifies for another exemption.

Will Existing Entities That Dissolve or Stop Business Before 2024 be Considered Inactive Entities?

Some entities that have been dissolved before 2024 may meet the qualifications of the inactive company exemption. However, these companies are required to file if they do not meet all six inactive entity requirements listed under “What is the Inactive Company Exemption?”.

Does a Holding Company Qualify as an Inactive Entity?

Most holding companies will not qualify as inactive entities. Generally, a holding company holds assets in other corporations, LLCs, or similar entities. By doing so, the holding company will not meet the criteria of an inactive company.

For guidance on filing a Beneficial Ownership Information Report for a holding company, visit How To File Beneficial Ownership Information Reports (BOIR) For A Holding Company.

Are Charitable Organizations Exempt?

Generally, Charitable organizations will fall under the “Tax-exempt entity” classification. Typically, these organizations could meet the criteria for entities that are recognized by this exemption:

• The entity is an organization that is described in section 501(c) of the Internal Revenue Code of 1986 and is exempt from tax under section 510(a) of the Code; OR

• The entity was an organization that was described in section 501(c), and was exempt from tax under section 501(a), but lost its tax-exempt status less than 180 days ago.

A charitable organization can only be recognized as tax-exempt after having its 501(c)(3) application approved by the IRS. A 501(c)(3) organization that has not been approved by the IRS will report its Beneficial Ownership Information until it receives its tax-exempt status.

To read more about exemptions, visit Who Doesn’t Report BOI? FinCEN BOIR Exemptions Explained.

Will Sole Proprietorships Need to File Beneficial Ownership Information Reports?

No, a sole proprietorship will not need to file a Beneficial Ownership Information Report. A sole proprietorship is a business structure where a single individual owns and operates the business. There is no legal distinction between the owner and the business entity. Additionally, sole proprietorships are not required any document of formation with the State. As a result, sole proprietors are not the target of the Corporate Transparency Act and are generally exempt from reporting.

Are Entities Formed in the U.S. but Exclusively Conducting Business Outside the United States Required to Submit Reports?

The Corporate Transparency Act requires all business entities created by filing a document with the Secretary of State or similar office to provide Beneficial Ownership Information to FinCEN. Typically, any company created in such a manner in the United States, regardless of whether or not they conduct business in the United States, will be subject to the Corporate Transparency Act unless they are otherwise exempt.

What Happens if a Reporting Company Last Filed as an Exempt Entity but Subsequently Loses its Exempt Status?

When a reporting company determines it no longer qualifies for an exemption, a reporting company should file an updated BOI Report with all current Beneficial Ownership Information.

Does a Company Wholly Owned by an Exempt Entity Need to File?

Generally, a reporting company is not required to file if it’s ownership interests are wholly owned, directly or indirectly, by any of these specific exempt entities:

• Securities reporting issuer

• Governmental authority

• Bank

• Credit union

• Depository institution holding company

• Broker or dealer in securities

• Securities exchange or clearing agency

• Other Exchange Act registered entity

• Investment company or investment adviser

• Venture capital fund adviser

• Insurance company

• State-licensed insurance producer

• Commodity Exchange Act registered entity

• Accounting firm

• Public utility

• Financial Market utility

• Tax-exempt entity

• Large operating company

Does a Company Partially Owned by an Exempt Entity have to File?

In the case of partial ownership by an exempt entity, the reporting company is still required to report its Beneficial Ownership Information. However, the report would generally exclude beneficial owners who originate solely from the exempt entity. A reporting company would list the name of the exempt entity in place of those beneficial owners.

What are the 23 Exemptions?
  • Securities reporting issuer
  • Governmental authority
  • Bank
  • Credit union
  • Depository institution holding company
  • Money services business
  • Broker or dealer in securities
  • Securities exchange or clearing agency
  • Other Exchange Act registered entity
  • Investment company or investment adviser
  • Venture capital fund adviser
  • Insurance company
  • State-licensed insurance producer
  • Commodity Exchange Act registered entity
  • Accounting firm
  • Public utility
  • Financial market utility
  • Pooled investment vehicle
  • Tax-exempt entity
  • Entity assisting a tax-exempt entity
  • Large operating company
  • Subsidiary of certain exempt entities
  • Inactive entity

Read through Who Doesn’t Report BOI? FinCEN BOIR Exemptions Explained. for a complete breakdown of every exemption.

Beneficial Owners

Who is a Beneficial Owner?

Beneficial owners are divided into two categories: significant owners and key decision-makers. According to FinCEN’s regulations, individuals qualify as beneficial owners if they meet either of the following criteria:

a.) They own a minimum of 25% of the reporting company.

b.) They exercise “substantial control” over the company and its operations. Individuals who exert substantial control might include senior officers, those who have authority to appoint and remove officers, and other important decision makers. CTAboi refers to these individuals as “Control Parties”.

Beneficial owners are typically direct owners, such as shareholders in a corporation or members in an LLC. Nevertheless, anyone wielding 25% control over the company through various indirect means, such as shares, voting rights, options, or future arrangements like warrants, as well as having interests in the company’s assets or profits, qualifies an individual as a beneficial owner.

 

See What is Beneficial Ownership? for further guidance on beneficial owners and ownership interest.

What is "Substantial Control"?

Under the Corporate Transparency Act, an individual can generally exercise substantial control over a reporting company in four different ways. However, the rule does not provide a concrete set of criteria for what constitutes “substantial control”. Cases of substantial control can vary based on the internal structure of the reporting entity and circumstance, so it is often recommended to seek professional guidance when complying with these requirements.

If an individual falls into any of the categories below, they could be exercising substantial control:

• The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer who performs a similar function).

• The individual has the authority to appoint or remove certain officers or a majority of directors (or similar bodies) of the reporting company.

• The individual is an important decision-maker for the reporting company, including decisions regarding the reporting company’s business, finances, and structure.

• The individual has any other form of substantial control over the reporting company. Control exercised in new and unique ways can still be substantial. For example, flexible corporate structures may have different indicators of control than the indicators included here.

 

See What Is Substantial Control For Beneficial Ownership Information Report (BOIR)? for more information.

What Information Should a Company Provide for Each Beneficial Owner?

A reporting company will provide the following information for each individual included in its Beneficial Ownership Information Report:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document (driver’s license, passport, or government-issued ID);

• An image of the ID document.

Who is a "Senior Officer" of a Reporting Company?

According to FinCEN, the “senior officer” title could include any individual holding the position or exercising the authority of a president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any other officer, regardless of official title, who performs a similar function.

For more on beneficial owners, visit Who Are Beneficial Owners For BOIR?

Is my Company's Accountant or Lawyer a Beneficial Owner?

Typically, accountants and lawyers are both considered to be ‘ordinary, arms-length advisors’, which is not considered to hold substantial control. Additionally, a lawyer or account who is designated as an agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exceptions.

However, the holder of general counsel in a reporting company is considered a “senior officer” by FinCEN and will be considered a beneficial owner.

What is Ownership Interest?

Generally, ownership interest is a ‘catch-all’ term that includes any medium or tool used to establish ownership rights in the reporting company. Examples of ownership interest include but aren’t limited to:

• Shares of equity;

• Stock;

• Voting rights;

• Capital interest;

• Profit interest

• Convertible instruments;

• Options.

To learn more about ownership interest and beneficial ownership, visit What is Beneficial Ownership?

How Does Joint Ownership Impact Ownership Interest Calculations?

Generally, joint owners of ownership interest are treated as if they both own the total ownership interest that they share. The calculation is done separately for each person’s interest, ensuring that the reporting company’s total ownership interest is not artificially inflated.

For Example: If two individuals, Person X and Person Y, are joint owners of 25% of Company A, Both individuals will have 25% ownership of Company A. As a result, both Person X and Person Y will be reported as beneficial owners.

How are Unexercised Options or Convertible Rights Calculated When Calculating Ownership Interest?

Typically, if a convertible instrument or unexercised option has the potential to become ownership interest, it should be included in ownership interest calculations.

The reporting company should calculate ownership interest, considering one beneficial owner at a time, by treating the convertible instruments that beneficial owner holds as if they have been ‘executed’ or exercised.

For more information on types of ownership interest, explore What Is Beneficial Ownership?

Is a Reporting Company's Designated "Partnership Representative" or "Tax Matters Partner" a Beneficial Owner?

The “partnership representative,” as defined in 26 U.S.C. 6223, or the formerly defined “tax matters partner” in the now-repealed 26 U.S.C. 6231(a)(7), is typically not a beneficial owner of the reporting company. Nevertheless, such any individual might be deemed a beneficial owner if they exert “substantial control” over the reporting company or possess at least 25% of the company’s ownership interests.

It’s important to note that a “partnership representative” or “tax matters partner” acting as a designated agent of the reporting company may be eligible for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.

Is a Member of a Reporting Company's Board of Directors Always a Beneficial Owner of the Reporting Company?

Generally, a beneficial owner of a company is any individual who, directly or indirectly, exercises substantial control over a reporting company, or who owns or controls at least 25% of the ownership interests of a reporting company. Whether a particular director meets any of these criteria is a question that the reporting company should consider on a director-by-director basis.

For examples of beneficial owners, visit What Is Beneficial Ownership?

Can a Beneficial Owner Report a Business Address Instead of a Residential Address?

All beneficial owners must submit a residential address, not a business address, when reporting under the Corporate Transparency Act.

How to Calculate Ownership Interest if a Reporting Company is Owned by Multiple Entities?

A reporting company will need to identify and report the individuals who control 25% of the ownership interest of the company through the owning entities. Additionally, the reporting company would need to identify who exercises substantial control over the entity, directly or indirectly.

For more on how to calculate beneficial ownership interest, visit What Is Beneficial Ownership?

How Many Beneficial Owners Will a Reporting Company Have?

FinCEN expects every reporting company will be able to identify and report at least one beneficial owner to FinCEN.

For a full guide on Beneficial Ownership Information Reports, visit A Complete Guide To BOIR.

Do LLC Member Buyout Rights Impact Ownership Interest Calculations?

Most LLC operating agreements include buyout rights. Generally, the ownership interest, in this case, would be treated as if these buyout agreements were exercised for the individual a reporting company is examining. If the ‘exercised’ buyout rights push an LLC member into above 25% ownership interest, they would meet the definition of a beneficial owner.

Buyout rights in LLC entities can push many unexpected individuals into the beneficial owner category.

Company Applicants

What is a Company Applicant?

Company applicants are individuals who files the documentation to form a business entity. Only reporting companies formed on or after January 1, 2024, need to include information about their company applicants in their BOI Reports. According to FinCEN, each reporting company can have up to two company applicants:

Company Applicant (1): This person is responsible for initiating the request for the company’s formation. This could be the person who personally completed the process or someone who used a third-party service.

Company Applicant (2):This individual is the direct filer of the company’s formation documents to the Secretary of State’s office. If a third-party incorporation service was used, the incorporation agent handling the filing typically serves as the second company applicant.

Visit Who Are Company Applicants For Beneficial Ownership Information Reports (BOIR)? for more information.

What Information Should a Company Provide for Each Company Applicant?

Generally, a reporting company needs to provide the following information for each individual included in its Beneficial Ownership Information Report:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document (driver’s license, passport, or government-issued ID);

• An image of the ID document.

However, If the company applicant works in corporate formation then the reporting company should report the business address of the company applicant. Otherwise, the reporting company would report the company applicant’s residential address.

Does Company Applicant Information Have to be Updated?

Company applicant information is collected once at the time of entity formation. Once the initial information on each company applicant has been provided, a reporting company will typically not be obligated to submit any changes or updates regarding the company applicant.

Is my Company's Accountant or Lawyer a Company Applicant?

A reporting company’s accountant or lawyer may act as a company applicant based on their role in the filing process that establishes a reporting company. A lawyer or accountant might qualify as a company applicant if they:

• Directly file the document that creates or registers the company.

• In cases with multiple individuals involved, are primarily in charge of guiding or overseeing the filing process.

For more examples of company applicants, visit Who Are Company Applicants For Beneficial Ownership Information Reports (BOIR)?

Can a Company Applicant Report a Business Address Instead of a Residential Address?

If the company applicant works in corporate formation—for example, as an attorney or corporate formation agent—then the reporting company can report the company applicant’s business address.

Otherwise, the reporting company must report the company applicant’s residential address.

Can a Third-Party Courier Who Only Delivers Formation Documents Be Considered a Company Applicant?

No, a third-party courier employee who only delivers documents to a Secretary of State or similar office and does not participate in the company creation or registration in any other manner will not be considered a company applicant.

Typically, the individual who requests the third-party courier will be a company applicant of the reporting company as the “direct filer.”

Foreign Reporting Entities

Who Should be Reported for Foreign Companies Registered On or After January 1st, 2024?

Starting January 1, 2024, foreign companies registering to do business in the United States will need to report the following to FinCEN:

• Beneficial Owners

• Control Parties

• Company Applicants

• Reporting Company Information

 

For each beneficial owner, control party, and company applicant a reporting company needs to provide its:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document including: U.S. passport, State driver’s License, or an Identification document issued by a state, local government, or tribe. If an individual does not have any of the previous documents, a foreign passport can be used;

• An image of the ID document.

 

The following information about the reporting company itself also needs to be provided:

• Reporting company full legal name (with corporate ending);

• Jurisdiction (state of formation, incorporation, or registration);

Jurisdiction of first registration (first state of registration in the U.S.);

• Principal business in the United States (NOT a registered agent address);

• Federal tax ID number (EIN or ITIN);

• All trade names or DBAs.

Who Should be Reported for Foreign Companies who Registered Before January 1st, 2024?

Existing companies formed before January 1, 2024, need to report the following to FinCEN:

• Beneficial Owners

• Control Parties

• Reporting Company Information

 

For each beneficial owner and control party, a reporting company needs to provide its:

• Full legal name;

• Date of birth;

• Current residential address;

• A unique identifying number from a valid ID document including: U.S. passport, State driver’s License, or an Identification document issued by a state, local government, or tribe. If an individual does not have any of the previous documents, a foreign passport can be used;

• An image of the ID document.

 

The following information about the reporting company itself also needs to be provided:

• Reporting company full legal name (with corporate ending)

• Jurisdiction (state of formation, incorporation, or registration)

Jurisdiction of first registration (first state of registration in the U.S.)

• Principal business in the United States (NOT a registered agent address)

• Federal tax ID number (EIN or ITIN)

• All trade names or DBAs

Does my Foreign Entity Need to Obtain an EIN Number?

Typically, a foreign reporting company will not need to apply for an EIN before submitting its Beneficial Ownership Information Report. According to FinCEN’s Small Entity Compliance Guide, a foreign reporting company can report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction. If the foreign entity doesn’t have an available tax identification number, the entity should file for an EIN.

 

For further instructions on how to apply for a Tax ID number, visit How To Find Your Company’s Tax ID Number.

What Should be Reported as the Principal Place of Business for a Foreign Reporting Entity?

For a foreign company, the indicated principal place of business should be the current U.S. street address that serves as the primary location for its work and management in all U.S. operations.

This cannot be a registered agent address. A registered agent’s main function is to be available, during normal business hours, to receive legal documents for the entity they are representing. A registered agent is not a principal place of business.

Does an LLC Formed in the U.S. and Subsequently Acquired by a Foreign Entity, who Becomes the Sole Owner, Have to File a Report?

Generally, any entity that meets the definition of a reporting company will be required to file an initial report. The Corporate Transparency Act requires any business entity created by filing a document with the Secretary of State or similar office to provide Beneficial Ownership Information to FinCEN. This definition generally includes most LLCs.

In most cases, a domestic LLC will be created through the filing of a document with the Secretary of State or similar office and will be required to file a Beneficial Ownership Information Report. This remains true in the event that the LLC is acquired by foreign company, barring the domestic LLC isn’t subject to any exemptions.

How Should a Foreign Pooled Investment Vehicle Report?

Foreign pooled investment vehicles are not fully exempt from reporting obligations. A reporting company categorized as a foreign pooled investment vehicle is obligated to report only one (1) beneficial owner with substantial control over the entity. In cases where multiple beneficial owners exercise substantial control, the entity should disclose the individual with the highest authority in the strategic management of the entity. Additionally, these entities are not obligated to report a company applicant.

Initial Reports

How Does a Company Created or Registered After January 1, 2024, Determine its Date of Creation or Registration?

Typically, the date of creation or registration is established based on the earlier of the following dates:

(1) The reporting company receives actual notice that its creation has become effective; or

(2) A Secretary of State or similar office first provides public notice, such as through a publicly accessible registry, that the domestic reporting company has been created or the foreign reporting company has been registered.

State practices can vary, so it is important for individuals who create or register reporting companies to stay aware of creation or registration notices or publications.

 

For more guidance on filing your Beneficial Ownership Information Report, visit A Complete Guide To BOIR.

Should Initial Reports Include Historical Beneficial Owners of a Reporting Company, or Only the Beneficial Owners at the Time of the Filing?

Initial Beneficial Ownership Information Reports should only include the beneficial owners at the time of the filing. Reporting companies are obligated to notify FinCEN of any future changes to beneficial owners and related Beneficial Ownership Information through updated reports.

 

Read Should You File A BOI Report Yourself? Top BOIR Mistakes for more information on what to look out for when filing your BOI Report.

What if my Entity Converts Entity Type Before Filing Its Initial Report?

The status of a reporting company’s reported information or a beneficial owner’s information at the submission of the initial report should be complete and accurate at the time of submission. Generally, if the conversion occurred before the submission of the initial filing, the report should reflect the present entity status of the reporting company.

Updated Reports

Does a Company Have to Update Beneficial Ownership Information Reports?

Yes, reporting companies are required to inform FinCEN about any changes in their beneficial owners or other reported Beneficial Ownership Information by submitting updated reports. To file an updated report a reporting company must submit a new report to FinCEN. The new report should include both the new information and any existing information that has not changed since the last submitted report.

Updated reports must be filed within 30 calendar days of a change occurring.

What Changes in Beneficial Ownership Information Must be Reported to FinCEN?

All of the information provided to FinCEN in a Beneficial Ownership Information Report must be accurate and up to date at all times. Some examples of changes in BOI that would require a reporting company to file a BOI Update Report include:

• A beneficial owner changes their residential address;

• A beneficial owner obtains a new driver’s license number;

• A beneficial owner’s passport expires and they obtain a new passport number;

• A reporting company appoints a new manager or senior officer;

• A beneficial owner sells or transfers their ownership interest changing who meets the ownership interest threshold of 25%;

• And more.

What Information Should be Included in an Updated Report?

A reporting company’s Updated Report should include both the new information and any existing information that has not changed since the last submitted report.

If the updated information is the only information in the report, the report will be considered incomplete.

By When Must a Reporting Company Update Beneficial Ownership Information?

A reporting company must file an updated report within 30 calendar days of any change occurring to the required information about your company or its beneficial owners.

What if There is an Error in a FinCEN Report?

Information provided in a Beneficial Ownership Information Report must be complete and accurate. In the event of any inaccuracies, a Beneficial Ownership Information Corrected Report should be submitted to FinCEN within 30 calendar days of discovering or having reason to become aware of the error.

If a Reporting Company Gains Exemption Status, Does it File an Updated Report?

If a reporting company filed a Beneficial Ownership Information Report but then becomes exempt from filing, the company should file an updated report. An updated Beneficial Ownership Information Report for a newly exempt entity will only require that:

• The entity identifies itself and,

• Check a box noting its newly exempt status.

Does a Reporting Company file an Updated Report if it Dissolves?

Typically, a reporting company that has already submitted an initial Beneficial Ownership Information Report will not have to report its dissolution with FinCEN. FinCEN will hold on to records for 5 years past the date of a reporting company’s dissolution.

If an Entity Converts From an LLC to a Corporation, Does it Have to File an Updated Report?

A conversion of entity type would require filing an updated report. Entity type is part of the information a reporting company needs to report about itself. Any change in reported information will require an updated report to be filed.

If the Type of Ownership Interest a Beneficial Owner Holds Changes, Does a Reporting Company Have to File an Updated Report?

Typically, a change in the type of ownership interest a beneficial owner holds does not require the reporting company to file an Updated Report. FinCEN does not require companies to report the type of interest.

However, if a current beneficial owner were to fall under the 25% threshold, they would no longer be considered a beneficial owner through ownership interest.

Trusts

Is a Trust a Reporting Company?

A trust is only a reporting company if it was created by the filing of a document with a Secretary of State or similar office.

State laws vary on whether certain entity types, such as trusts, require the filing of a document with the Secretary of State or similar office to be created or registered. If a trust is created in a U.S. jurisdiction that requires such filing, then it is a reporting company, unless an exemption applies.

For more information on what businesses can be reporting companies, visit Which Businesses Need to File BOIR? Reporting Companies Explained.

What if a Trust is a Beneficial Owner of a Reporting Company?

Typically, when a trust is an entity that has 25% ownership interest in a reporting company, the following individuals could be considered beneficial owners representing the trust:

• Any trustee or other individual with authority to dispose of trust assets;

• Any beneficiary who either (1) Is the sole permissible recipient of trust income and principal, or (2) Has the right to demand a distribution or withdrawal of substantially all of the trust assets; and

• Any grantor or settlor who has the right to revoke the trust or otherwise withdraw trust assets.

 

A trust could be represented by more than one beneficial owner.

Is A Trust Considered a Reporting Company if it Registers With a Court of Law for the Purpose of Establishing the Courts Jurisdiction Over any Disputes Involving the Trust?

Typically, the registration of a trust with a court of law to establish the court’s jurisdiction over any disputes involving the trust does not make the trust a reporting company.

Can a Trustee be a Beneficial Owner?

Generally, a trustee or any other individual with authority to dispose of trust assets could hold ownership interest or substantial control over a reporting company through the trust. If the trust holds 25% ownership interest or more in the reporting company, these individuals could qualify as beneficial owners.

Similarly, if the trust directly or indirectly exercises substantial control through contracts, arrangements, understandings, relationships, or otherwise, a trustee might be considered a beneficial owner.

Can a Grantor be a Beneficial Owner?

Typically, a grantor or settlor with the right to revoke or otherwise withdraw trust assets may hold ownership interest or substantial control over a reporting company through the trust. If the trust holds 25% or more ownership interest in the reporting company, these individuals could qualify as beneficial owners.

Are Revocable or Irrevocable Trusts Reporting Companies?

A trust is only a reporting company if it was created by the filing of a document with a Secretary of State or similar office. Likewise, a foreign entity is a reporting company only if it filed a document with the Secretary of State or similar office to register to do business in the United States.

Typically, trusts do not meet these criteria. However, if a U.S. jurisdiction requires such a filing, then it is a reporting company unless an exemption applies.

In most cases, trusts will be pulled into Beneficial Ownership Information Reports as an entity with a 25% or greater share of ownership interest in a reporting company, or as an entity that has substantial control over a reporting company. In these cases, beneficial owners of the trust might be required to file.

What Parties of a Revocable Trust are Reported as Beneficial Owners?

Generally, beneficial owners of revocable trusts include:

• Trustee(s);

• Settlor(s);

• Single beneficiary;

 

Note that trusts with multiple beneficiaries typically do not have to report those beneficiaries as beneficial owners. According to FinCEN, “only a beneficiary who is the sole permissible recipient of trust income and principal or who has the right to demand a distribution of or withdraw substantially all of the trust assets should be reported.”

What Parties of an Irrevocable Trust are Reported as Beneficial Owners?

Generally, beneficial owners of irrevocable trusts include:

• Trustee(s);

• Single beneficiary.

 

Trusts with multiple contingent beneficiaries typically do not have to report those beneficiaries as beneficial owners. According to FinCEN, “only a beneficiary who is the sole permissible recipient of trust income and principal or who has the right to demand a distribution of or withdraw substantially all of the trust assets should be reported.”

FinCEN Identifiers

What is a FinCEN Identifier?

A “FinCEN identifier” is a unique identifying number issued by FinCEN upon request, provided certain information is submitted by an individual or reporting company. Here are the quick facts:

• Obtaining a FinCEN identifier is voluntary;

• Each individual or reporting company is eligible for only one FinCEN identifier;

• Companies can use FinCEN identifiers in their BOI Reports instead of detailing information about beneficial owners or company applicants.

Individuals can apply for a FinCEN identifier directly on FinCEN’s website without any cost. The application requires essential details such as name, date of birth, address, a unique identification number, and an image of an accepted ID document—identical to the information beneficial owners and company applicants are required to submit in BOI Reports.

 

Visit What Is A FinCEN Identifier (FinCEN ID)? for more information about FinCEN Identifiers and how to obtain one.

Is it Mandatory to Keep the Personal Information Submitted for a FinCEN Identifier Accurate and Up-To-Date?

Yes, individuals need to update or correct their information using the FinCEN identifier application, which is the same tool used to request the identifier.

• Any changes to the information provided for the FinCEN identifier must be reported within 30 calendar days of the change;

• If there’s a mistake in the information, it must be corrected within 30 calendar days of becoming aware of the error.

For companies with a FinCEN identifier, they must update or correct their information by filing an updated or corrected Beneficial Ownership Information Report, as necessary.

Can I Deactivate a FinCEN Identifier?

FinCEN is assessing options to allow individuals to deactivate a FinCEN identifier so that they do not need to update the underlying personal information on an ongoing basis. FinCEN will provide additional guidance on this functionality upon completion of that process.

Access and Security

Who Will be Able to Access Reported Beneficial Ownership Information?

According to FinCEN, the Corporate Transparency Act establishes that FinCEN has the authority to disclose Beneficial Ownership Information under specific circumstances to six categories of recipients:

• U.S. Federal agencies engaged in national security, intelligence, or law enforcement activity;

• U.S. State, local, and Tribal law enforcement agencies;

• Foreign law enforcement agencies, judges, prosecutors, central authorities, and competent authorities (foreign requesters);

• Financial Institutions using BOI to facilitate compliance with customer due diligence requirements under applicable law;

• Federal functional regulators and other appropriate regulatory agencies acting in a supervisory capacity, assessing financial institutions for compliance with CDD requirements under applicable law;

• Treasury officers and employees.

 

Every type of authorized user must follow certain security and confidentiality rules. This includes setting up a safe system to store BOI, keeping records of BOI requests that can be checked, limiting who can access BOI, doing regular checks, and giving FinCEN reports and certifications.

How Will FinCEN Protect Beneficial Ownership Information?

As established by the Corporate Transparency Act, a private database will securely store Beneficial Ownership Information reported to FinCEN. This database will utilize information security methods and controls similar to those employed by the Federal government to safeguard sensitive but non-classified information systems at the highest security level.

 

For more about FinCEN, explore What Is FinCEN And BOIR?

When Can Financial Institutions Request Access to Beneficial Ownership Information?

Financial institutions, like banks, can request Beneficial Ownership Information from FinCEN to fulfill customer due diligence requirements. However, banks can only request BOI information with the relevant reporting companies consent.