As you may know, Congress recently enacted the Corporate Transparency Act (“CTA”), which requires that certain entities submit a report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) containing information about their “beneficial owners” (“BOI Report”). Filing BOI Reports is mandatory, unless an exemption applies to an entity as discussed below.

Each non-exempt entity must submit to FinCEN a BOI Report containing the following basic information: (1) name of each beneficial owner; (2) date of birth of each beneficial owner;  (3) address of each beneficial owner; and (4) the identifying number and issuer for each beneficial owner from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. Additionally, FinCEN requires that each non-exempt entity submit certain information about the entity itself, including its name(s) and address. Lastly, each non-exempt entity incorporated, organized, or formed on or after January 1, 2024, is required to submit information about the individual(s) who incorporated, organized, or formed such entity.

The BOI Report must be submitted through a secure filing system available on the FinCEN website. After filing the initial BOI Report, subsequent filings will only be required when there is updated or corrected information to disclose relating to each non-exempt entity’s beneficial ownership and there will not be any annual maintenance filings. Please also be aware that FinCEN will not send you unsolicited email requests and that there have been reports of numerous “phishing” and other fraudulent attempts by third-party bad actors to solicit information under the guise of CTA compliance.

There are currently 23 statutory exemptions to the CTA’s reporting requirements. Notably, there is an exemption for “large operating companies,” which are defined as companies that: (1) employ more than 20 employees on a full-time basis in the United States; (2) have filed in the previous year federal income tax returns in the United States demonstrating more than $5,000,000 in gross receipts or sales in the aggregate, including the receipts or sales of other entities owned by the entity and through which the entity operates; and (3) have an operating presence at a physical office within the United States. Other exceptions may be available but are not generally applicable to many of our clients.

Unless an exemption applies, the CTA imposes reporting obligations on existing entities, as well as newly formed entities, according to the following timelines: (1) a non-exempt entity incorporated, organized, or formed before January 1, 2024, must file a BOI Report prior to January 1, 2025; (2) a non-exempt entity incorporated, organized, or formed on or after January 1, 2024, must file a BOI Report within 90 days of receiving actual or public notice that the entity’s creation or registration is effective; and (3) a non-exempt entity incorporated, organized, or formed on or after January 1, 2025, must file a BOI Report within 30 days of receiving actual or public notice that the entity’s creation or registration is effective.

Please be advised that civil and criminal penalties may apply for entities that willfully provide false or fraudulent information or willfully fail to submit a complete and/or updated BOI Report.

Given the availability of established third-party service providers equipped to assist with the filing of required BOI Reports, we believe that it would not be cost-efficient for our firm to prepare and file a BOI Report on your behalf. To that end, we have confirmed that Capitol Services, Inc., which our firm currently uses for various corporate filings, is available to assist with BOI Report filings:

Capitol Services:

• Service fees are projected to be approximately $120 per entity
• Visit https://www.capitolservices.com/cta/ for information on how to make this filing

To determine if your entity must file a BOI Report, you can use the CTA Exemption Wizard provided by Capitol Services at https://www.capitolservices.com/introduce-cta-exemption-wizard/. This self-assessment tool will guide you through a series of questions to help determine if you are required under the CTA to file a BOI Report.

Lastly, you may find FinCEN’s “Small Entity Compliance Guide” a helpful starting point in navigating your reporting obligations, if any. A copy of that guide can be obtained at the following link: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf.

Because each case of gathering information for an entity will differ, we cannot offer a fixed or estimated cost up front if you choose to have our firm assist you. If you would like our firm to assist you notwithstanding the options available to you above, please feel free to reach out to Rachel Anklam ([email protected]). Please do not hesitate to contact us if you have any questions or require any assistance. We will take no further action relating to the CTA and the filing of a BOI Report on your behalf unless otherwise instructed by you.

Very truly yours,

Connor N. Hubach