Navigating Beneficial Ownership Reporting Requirements: What Business Owners Need to Know

As of December 2024, significant developments have occurred regarding the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements. These changes, driven by recent legal rulings, directly impact businesses nationwide. Here’s what you need to know and how to prepare for compliance. What is the Corporate Transparency Act? The CTA, enacted in 2021, aims to combat money laundering and other financial crimes by requiring certain businesses to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners are individuals who own or control at least 25% of a company or exercise significant influence over it. Who Must Comply?

1. Reporting Companies: Generally, all corporations, limited liability companies (LLCs), and similar entities formed in the U.S. or registered to do business here.

2. Exemptions: Larger companies meeting specific criteria (e.g., more than 20 employees, $5 million in revenue, and a physical presence in the U.S.) and certain regulated entities (e.g., banks) are exempt.

Recent Legal Developments

1. December 3, 2024: A U.S. District Court issued a nationwide preliminary injunction, halting the enforcement of the CTA and pausing BOI reporting requirements.

2. December 23, 2024: The U.S. Court of Appeals for the Fifth Circuit reversed the injunction, reinstating the CTA and BOI reporting requirements.

Key Compliance Deadlines

With the injunction lifted, the following deadlines apply:

1. Existing Entities (Formed Before January 1, 2024): BOI reports must be filed by January 13, 2025.

2. New Entities (Formed in 2024 or Later): BOI reports must be filed within 90 days of formation or registration.

What Information Must Be Reported?

Businesses must report the following information about their beneficial owners:

1. Full legal name

2. Date of birth

3. Address

4. A unique identifying number from a government-issued document (e.g., passport or driver's license)

Steps to Take Now

1. Assess Your Business’s Status Determine if your business qualifies as a reporting company or falls under an exemption. If you’re unsure, consult with a legal professional.

2. Gather Necessary Information Gather the required details about each beneficial owner to ensure a smooth filing process.

3. Designate a Compliance Officer Consider assigning a person or team to oversee compliance efforts and coordinate with FinCEN.

4. Update Internal Policies Develop or revise internal policies to track changes in beneficial ownership and ensure timely updates to FinCEN.

5. Monitor Regulatory Updates Keep an eye on updates from FinCEN and the legal system, as the situation may continue to evolve.

Potential Penalties for Non-Compliance

Failure to comply with the BOI reporting requirements can result in:

1. Civil penalties of up to $500 per day of non-compliance

2. Criminal fines of up to $10,000 and imprisonment for willful violations

Why Compliance Matters

Beyond avoiding penalties, compliance with the CTA demonstrates your business’s commitment to transparency and ethical practices. It also helps maintain trust with regulators, investors, and partners.

How We Can Help

Navigating the complexities of the CTA and BOI reporting requirements can be daunting. Our team at EQUES® Law Group is here to guide you through every step of the process, from determining your reporting obligations to filing with FinCEN. Contact us today for personalized assistance. Chris M. White Executive Partner EQUES® Law Group 1 (844) My-EQUES