The Corporate Transparency Act (CTA) became effective on January 1, 2024.
The law will create a massive government database containing the identities and contact information of defined small corporate and LLC “beneficial owners.” The beneficial owners are the humans who own the entity or exercise substantial control over it.
Government law enforcement and security agencies will use this information to help combat the use of shell companies that engage in money laundering, tax evasion, terrorism, and other crimes.
What Does This Mean for Your Business?
To comply with the law, new and existing small businesses will have to file a beneficial ownership information (BOI) report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
- Companies created or registered to do business in the U.S. before Jan. 1, 2024, must file by Dec. 31, 2024.
- Companies created or registered to do business in the U.S. in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective
The BOI report is filed online in a new federal database called BOSS (an acronym for Beneficial Ownership Secure System). There is no filing fee. The information in the BOSS database is strictly for use by law enforcement, the IRS, and other government agencies—it will not be publicly disclosed.
As for who can view that information, FinCEN issued a final rule in late December that implements a phased approach to BOI access, starting with a pilot program for a handful of key federal agency users in 2024 and then gradually expanding the list of authorized users.
Tips When Ready to File
You have the option to create a FinCEN ID. This is beneficial if you have to report under multiple companies – it allows you always to enter the FinCEN ID number instead of your personal information.
You should start the process on a device that can take a photo of documents or have copies available on your computer to upload into the system. Before beginning the filing process, you should have information for each individual, including a copy of their ID.
As CPAs, this is performing legal work and interpreting law, so we can not do it. But it is not difficult to perform. If you are not comfortable with filing this, we recommend you contact your legal team.