The past few months have brought so many changes to the Corporate Transparency Act (CTA) that it’s hard not to have whiplash. With all the plot twists and courtroom flip-flops, this saga feels like binge-watching a docu-soap. While the rest of the world is keeping up with the Kardashians, you might want to keep up with the CTA, as the reality for this landscape is still evolving.
Are domestic US businesses still expected to file a BOI report?
No, domestic US businesses and US citizens do not need to file the BOI report based on an interim ruling. However, certain businesses are still required to do so, as discussed in more detail below. The interim ruling is provisional and can only be relied on until the courts issue a final ruling, which is expected to be made available to the public by the end of 2025.
What is the CTA?
The CTA was established to deter the use of anonymous shell companies for money laundering, tax evasion, and other illicit purposes. It requires specific entities to report their BOI to the FinCEN. As of the most recent pronouncement, this information is then consolidated into a repository of data only for foreign entities or individuals who own or control companies operating within the United States.
The FinCEN is a bureau within the US Department of the Treasury that helps protect the integrity of the US financial system. FinCEN is tasked with investigating financial crimes by gathering and analyzing financial data. It administers regulatory compliance for financial institutions and assists law enforcement by sharing the financial data gathered.
Who must comply with the CTA?
Under previous CTA legislation, many small businesses operating within the US would have been subject to onerous reporting requirements. Under FinCEN’s most recent announcement, only entities defined as “foreign reporting companies” are required to complete BOI reporting.
A foreign reporting company is defined as any corporation, limited liability company (LLC), or other similar entity that is
- Formed under the laws of a foreign country; and
- Registered to do business in the US.
Even though the US Treasury Department announced it would no longer enforce the CTA’s beneficial ownership for domestic businesses, the following applies:
- Foreign entities registered to do business in the US before March 21, 2025, must file BOI reports no later than 30 days from that date.
- Foreign entities registered to do business in the US on or after March 21, 2025, have 30 calendar days after the effective date of registration to file an initial BOI report.
Penalties for non-compliance
Entities that fail to comply with the CTA’s reporting requirements may face significant penalties.
- Civil penalties: Up to $592 per day for each day the violation continues.
- Criminal penalties: Up to $10,000 and imprisonment for up to two years for willful violations.
Frequently asked questions (FAQs)
Are small businesses exempt from BOI reporting under the CTA?
Yes. Based on the legislation at the time of this publication, US-owned and operated businesses (large or small) do not need to file beneficial ownership information reports.
Who needs to file the CTA reporting?
Foreign businesses operating in the US must file BOI reports under the CTA.
How do you file a BOI report?
BOI reports are filed on boir.org. Reporting requirements shown on the website may take time to reflect recent legislative updates.
How often do filings need to be updated?
Entities must update their BOI reports within 30 days of any change in the reported information to ensure FinCEN’s records remain accurate.
