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Frequently Asked Questions

Corporate Transparency Act

What is the Corporate Transparency Act?

Enacted as 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, is a branch of the United States Department of the Treasury dedicated to fighting financial crimes domestically and globally. These crimes include money laundering, terrorist activities, and other financial crimes.

Under The Corporate Transparency Act, FinCEN is responsible for gathering Beneficial Ownership Information of companies doing business in the U.S. and maintaining the information in a confidential database. In doing so, FinCEN enhances 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. These entities 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 $591 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 fails to file a BOI Report, senior officers and the non-compliant beneficial owner may be subject to penalties due to willful noncompliance.

Timing

When Does the Corporate Transparency Act Take Effect?

The Corporate Transparency Act (CTA) took effect on January 1, 2024, and introduced reporting requirements for businesses.

Existing businesses formed before January 1, 2024, must file Beneficial Ownership Information Reports with FinCEN by January 1, 2025, to comply 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 is shortened 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?

When the reporting company or its beneficial owners have any changes in information from the initial report, 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 formed outside the United States that has 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 (As Defined By The CTA)

• Substantial Control Parties

• Reporting Company Information

 

For each beneficial owner and substantial 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; and

An image of the current passport or United States issued driver’s license.

OR

• The beneficial owners FinCEN ID number obtained from Login.gov.

 

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

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

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

• Principal business address (can only use the registered agent address if no other address for the reporting company exists in the United States);

• Federal tax ID number (EIN);

• All trade names and 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 (As Defined By The CTA)

• Substantial Control Parties

• Company Applicants

• Reporting Company Information

 

For each beneficial owner, substantial 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; and

An image of the passport or United States issued driver’s license.

OR

• The beneficial owners FinCEN ID number obtained from Login.gov.

 

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

• Reporting company full legal name (with the corporate ending and proper punctuation);

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

• Principal business address (can only use the registered agent address if no other address for the reporting company exists in the United States);

• Federal tax ID number (EIN);

• All trade names and 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 United States sourced gross receipts in the previous year as reported on a tax return and satisfies other exemption criteria such as employing more than 20 full time employees and a United States office, it could be an exempt entity. See the Large Operating Company exemption for more details on the other criteria.

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?

The reported address must be a U.S. street address of the reporting company’s principal place of business. If the company has no United States address, only then can it use its registered agent’s address.

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 or through a third party filing service.

Exemptions

Are any Companies Exempt From Beneficial Ownership Reporting?

FinCEN has declared some companies exempt from the Beneficial Ownership Information Reporting requirements. Twenty-three (23) types of businesses 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 (a limited exemption which companies must meet a 6-part test);

• Large operating companies (companies must meet a 3-part test to qualify);

501(c)(3) organizations approved by the IRS after application and review;

• 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 later 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 three requirements:

• 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;

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 3 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 Consolidating Employees from Subsidiaries Allow A Company to Meet the Large Operating Company Exemption Criteria?

Consolidation of employees across affiliated entities is not 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 of disregarded entity wholly owned subsidiaries, 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. When 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.

However, if the parent company qualifies for the large company exemption, then all of its wholly owned subsidiaries will also be exempt under that exemptions umbrella.

 

Can Seasonal Companies Qualify for the Large Operating Company Exemption?

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. A company with seasonal employees may go in and out of exempt status depending upon the season.

 

What is the Inactive Company Exemption?

According to FinCEN, an entity is 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 assets, including any ownership interest in a corporation, limited liability company, or 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 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 example, usually holding companies do not have more than 20 employees.

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:

(A) 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

(B) 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 the IRS has not approved yet after the company filed its IRS Form 1023 application for tax exemption will report its Beneficial Ownership Information until it receives its tax-exempt approval.

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?

A true 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 to file a document of formation with the State. As a result, sole proprietors are not the target of the Corporate Transparency Act and are exempt from reporting.

The important thing to understand is that if no entity was formed by a filing with the Secretary of State, then it is not a reporting company. When the CTA refers to sole proprietorships, they do not mean a single member LLC taxed as a sole proprietorship. A sole proprietorship instead is simply a trade name registry of individuals who start doing business in the name other than their own. For example, Joe’s Food truck operating without Joe starting an LLC.

 

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 it conducts business in the United States, will be subject to the Corporate Transparency Act unless it is 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, the 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 its 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

Certain accounting firms

• Public utility

• Financial Market utility

Tax-exempt entity approved by IRS

Large operating companies meeting the 3-part test

 

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 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 (501(c) – Approved)
  • Subsidiary of a tax-exempt entity*
  • Large operating company*
  • Subsidiary of certain exempt entities*
  • Inactive entity*

(*) Review the more detailed explanations of these exemptions to confirm that the applicable exemption applies to your business.

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, private lenders, leases, and license agreements, 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 circumstances, 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. The 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.

• Individuals with substantial control of all entities and trusts who hold significant ownership over the reporting company also need to be reported.

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 (non-expired driver’s license or non-expired passport); and

An image of the picture page 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 does not mean they hold substantial control. Additionally, a lawyer or accountant designated as an agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exceptions.

However, the holder of the title 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.

Note: For community property states, when one spouse is a beneficial owner, the other spouse should also be reported as a beneficial owner.

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 the 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 an 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 the reporting company’s designated agent 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?

While FinCEN suggests some members of the board of directors may not be beneficial owners, the FinCEN guidance is too vague to provide any criteria for excluding any member of the board of directors to do so with confidence.

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. Note that even if the non-expired driver’s license has a different former residential address, it is important only to include the current residential address where that beneficial owner resides.

How to Calculate Ownership Interest if Multiple Entities own a Reporting Company?

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.

 

Company Applicants

What is a Company Applicant?

Company applicants are two specific individuals, the first of whom is responsible for filing the documentation. Think of this person as the last to touch the filing at the instance it is submitted to the Secretary of State. The second company applicant is the person most responsible for directing the filing of a new 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 has two company applicants (except in the rare case of a “self-filer” where only one company applicant is reported).

Company Applicant (1): This individual is the direct filer of the company’s formation documents. Typically filings are submitted by computer or fax. This company applicant hits the “send” button to deliver the filing to the Secretary of State. If a third-party incorporation service was used, the incorporation agent handling the filing serves as the first company applicant.

Company Applicant (2): This person is responsible for initiating the request for the company’s formation and therefore directs the filing most significantly. This could be the person who personally completed the process or someone who used a third-party service.

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. Most incorporation service companies will provide their customers the FinCEN ID of the filer, so no further personal information of the filer must be listed.

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 both company applicants has been provided, a reporting company does not submit any changes or updates regarding the company applicant acting in that capacity.

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), they 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?

Only if the company applicant works for a corporate formation service—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 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, unless they are an employee of the company formation service.

The individual who hands the document to a third-party courier would 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?

As of January 1, 2024, companies formed outside the United States who register to do business in the United States will need to report the following to FinCEN:

• Beneficial Owners

• Substantial Control Parties

• Company Applicants

• Reporting Company Information

 

For each beneficial owner, substantial 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.

 

OR

• The beneficial owners FinCEN ID number obtained from Login.gov.

 

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

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

• 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 (can only use the registered agent address if no other address for the reporting company exists in the United States);

• Federal tax ID number (EIN); and

• All trade names and 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

• Substantial Control Parties

• Reporting Company Information

 

For each beneficial owner and substantial 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.

 

OR

• The beneficial owners FinCEN ID number obtained from Login.gov.

 

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

• Reporting company full legal name (with the corporate ending and proper punctuation);

• 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 (can only use the registered agent address if no other address for the reporting company exists in the United States);

• Federal tax ID number (EIN); and

• All trade names and 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.

In the absence of any place of business in the United States, the company’s registered agent address may be used. A registered agent’s main function is to be available during normal business hours to receive legal documents for the entity they are representing.

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’s filing service company receives actual notice that the entity creation has been approved; 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. In the event you cannot determine both of the two dates, then it is best to use the company formation date to start the clock on filing your initial BOIR before late fees and criminal penalties begin.

 

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 time of submission of the initial report should be true, correct, and complete. Generally, if the conversion occurred before the submission of the initial filing, the report should reflect the reporting company’s present entity status. It would also be a good time to list the former name under the trade name category in your BOIR, out of an abundance of caution.

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 moves to a new residential address;

A beneficial owner obtains a new driver’s license with a different number than the one reported on the reporting company’s BOIR;

A beneficial owner’s passport used on a BOIR 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%;

A minor who is listed as a Beneficial owner turns 18 and needs to report their own information, rather than the information of their parent or guardian;

A beneficial owner changes their legal name;

• 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 true, correct and complete. In the event of any inaccuracies, a Beneficial Ownership Information Corrected Report must 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 legally is only permitted to hold on to records for five (5) years past the date of a reporting company’s dissolution.

 

The FinCEN reporting form currently has no option for reporting that the company has dissolved.

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.

Trusts

Is a Trust a Reporting Company?

A trust is only a reporting company if it was created by filing a document with a Secretary of State or similar office. Estate planning trusts are not created by the filing of a document with the Secretary of State. Therefore currently these estate planning trusts are not reporting companies. Other types of trusts often known as business trusts or statutory trusts are reporting companies created by a filing with the Secretary of State.

State laws vary on whether certain entity types, such as trusts, require the filing of a document with the Secretary of State or a 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.

Notwithstanding the foregoing, if an estate planning trust or land trust owns an LLC or other reporting companies, the present beneficiaries, trustees, grantors who are owners or substantial control parties would need to be reported.

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 has present beneficiaries whose beneficial interest in the trust adds up to 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, manage, or distribute 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.

 

Note that more than one beneficial owner could represent a trust.

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 manage, distribute or dispose of trust assets could hold an ownership interest or substantial control over a reporting company through the trust. If the trust holds a 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 would qualify as beneficial owners.

Are Revocable or Irrevocable Trusts Reporting Companies?

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

Typically, estate planning trusts and asset protection trusts are common law trusts that 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 Statutory Trusts or Business Trusts are Reported as Beneficial Owners?

Generally, beneficial owners of revocable trusts include:

• Trustee(s);

• Settlor(s);

Beneficiary(ies) with current beneficial interest of at least 25%, and generally not contingent beneficiaries;

Trust Protectors; and

Trust Advisors.

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 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 at Login.gov 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—similar to the information beneficial owners and company applicants are required to submit in BOI Reports.

The advantage of a reporting company using FinCEN Identifiers instead of all personal information is that the FinCEN ID shifts the burden of monitoring personally identifiable information away from the reporting company to the Beneficial owner individually. That way the reporting company does not get in trouble if a residential address change is not reported. Instead only the individual beneficial owner gets subject to penalties. Additionally, some individual beneficial owners may prefer not to provide and update their personally identifiable information with the reporting company on an ongoing basis. The obligation to update FinCEN Identifier personal information is a lifelong obligation.

 

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 their information using the FinCEN identifier application, which is the same tool used to request the identifier, located at Login.gov.

• 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.

 

Access and Security

Who Will Be Able to Access Reported Beneficial Ownership Information?

According to FinCEN, the Corporate Transparency Act information is to be held in the government’s most secure database, similar to the systems used by the IRS to hold tax return information securely. Thus FinCEN will prevent the information from going out the back door. Access rules also limit how information can be used by authorized persons, subject to severe criminal penalties for unauthorized use. The CTA 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 customer due diligence requirements under applicable law;

• Treasury officers and employees.

 

Every authorized user must follow certain security and confidentiality rules. These include setting up a safe system to store BOI, keeping records of BOI requests that can be checked, limiting who can access BOI, conducting 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 under the Bank Secrecy Act. However, banks can only request BOI information with the consent of the relevant reporting companies.