THE CORPORATE TRANSPARENCY ACT

As of January 1, 2024, a new law called the Corporate Transparency Act (“CTA”) requires certain owners of registered entities like LLCs, Limited Partnerships and Corporations to provide personal information to the US Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).

With limited exceptions, this requirement applies to ALL state registered entities. The database will be used to monitor and investigate criminal activity. The database will not be accessible by the general public.

Reporting Requirements

The CTA requires Beneficial Ownership Information (“BOI”) for: (1) each state registered entity, (2) each individual owning more than 25%, (3) the person who created the entity, and (4) each individual participating in entity decisions. BOI includes entity name, address, tax number, and each reporting individual’s name, residential address, date of birth, and either a state-issued ID, driver’s license, or passport number with a clear picture.

After the initial report, any change in information must be updated within 30 days (like a change of address, or expiration of driver’s license). Even if you dissolve an entity this year, it must still be registered.

The deadline for the initial BOI report depends on the entity’s date of formation. For Texas entities this is the filing date with the Texas Secretary of State (for out of state entities, the date may be determined differently). For filing dates before 2024, the deadline is January 1, 2025; for filing dates during 2024, the deadline is 90 days after filing; and for filing dates after 2024, the deadline is 30 days after filing. Failure to comply with the CTA can result in civil penalties of $590.00 per day (currently and indexed for inflation), and criminal penalties of up to $10,000.00 and/or 2 years imprisonment.

This new law represents a dramatic change for business owners. You will likely have questions. Please understand our firm does not provide advice or services for BOI reporting except when creating a new entity. Your CPA or business attorney may be the best resource to help you with this. The Resources for Your Entity below provides links to additional information about BOI reporting. You may want to consider our Business Shield™ program, which is our comprehensive program to help our clients keep their entities in compliance with state law issues and enhance asset protection too. 

Resources For Your Entity:

Beneficial Ownership Information (“BOI”) Reporting under the Corporate Transparency Act

FinCEN

FinCEN’s Frequently Asked Questions: https://www.fincen.gov/boi-faqs

FinCEN’s Small Business Compliance Guide: https://www.fincen.gov/boi/small-entity-compliance-guide

FinCEN’s portal for self-reporting: https://boiefiling.fincen.gov