Understanding the Corporate Transparency Act and Beneficial Ownership Report Requirements
A major update to the Corporate Transparency Act (CTA), passed by Congress in 2021, went into effect on January 1, 2024. Under this new provision, a significant number of businesses in the United States are required to file a Beneficial Ownership Report (BOR) with the U.S. Department of Treasury. This requirement applies retroactively to businesses currently active and operating, making compliance critical for many business owners.
If you are a business owner, here’s what you need to know about the Corporate Transparency Act and its Beneficial Ownership Report requirements.
What is the Corporate Transparency Act?
The Corporate Transparency Act was introduced to combat financial crimes such as money laundering and tax evasion by increasing transparency in corporate ownership. Under the CTA, certain businesses are now required to disclose their beneficial ownership information (BOI) through a Beneficial Ownership Report.
Who Must File a Beneficial Ownership Report?
The Beneficial Ownership Report filing requirement applies to a wide range of business entities, including but not limited to:
- Limited Liability Companies (LLCs)
- Corporations
- Professional Corporations
- General Partnerships
- Limited Partnerships
- Limited Liability Partnerships (LLPs)
- Non-Profit Corporations (unless granted tax-exempt status by the IRS)
- Registered Sole Proprietorships
Exemptions:
- Businesses with more than 20 full-time employees and gross receipts or sales over $5 million.
- Entities in highly regulated industries such as publicly traded companies, banks, insurance companies, utility companies, and financial service providers.
When Are Beneficial Ownership Report Due?
Deadlines for Filing a Beneficial Ownership Report:
- Entities formed before 1/1/2024: File by January 1, 2025.
- Entities formed after 1/1/2024: File within 90 days of the date of formation.
- Entities formed after 1/1/2025: File within 30 days of the date of formation.
What Information is Required?
The Beneficial Ownership Report must include details for each beneficial owners:
- Full legal name
- Date of birth
- Current address
- Photo identification (e.g., driver’s license or a passport)
Who Qualifies as a Beneficial Owner?
- Individuals owning 25% or more of the business’s interests or stock.
- Senior officers of the business.
- Anyone with decision-making authority, including financial or budgetary control or the power to appoint or remove officers.
Penalties for Non-Compliance
Failure to comply with the Beneficial Ownership Report requirements can result in:
- Civil penalties: Up to $500 per day for each day of non-compliance.
- Criminal penalties: Fines and up to 2 years of imprisonment.
How Morella & Associates Can Help
If you need assistance filing your Beneficial Ownership Report or have questions about your obligations under the Corporate Transparency Act, contact Morella & Associates today. We provide comprehensive legal guidance to help businesses navigate compliance requirements.
Phone: 412-369-9696
Office Address: 706 Rochester Road, Pittsburgh, PA 15237
As part of our business entity formation services, our firm now includes Beneficial Ownership Report filing services for entities formed after January 1, 2024. If you formed your business through us, we’ve already handled—or are in the process of handling—your filing.
Stay Compliant with Morella & Associates
Understanding and complying with the Corporate Transparency Act is essential for your business’s success. Reach out to us for personalized legal support and ensure you meet all federal requirements.