Effective Jan. 1, 2024, most U.S. companies are required to report Beneficial Ownership Information (BOI) to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). The rule places heavy compliance burdens on most companies, under penalty of heavy fines or even jail time.
The BOI rule, mandated by the Corporate Transparency Act (CTA) of 2021, is aimed at enhancing the ability of FinCEN and other agencies to protect U.S. national security and the U.S. financial system from illicit actors using corporate structures such as shell and front companies to obfuscate their identities and launder their ill-gotten gains through the United States.
Under the CTA, many privately held U.S. entities and foreign entities registered to do business in the U.S. are required to file a report with FinCEN. This report must identify and provide personal information related to:
The entity itself
Each individual who, directly or indirectly, exercises "substantial control" over the entity or owns at least 25 percent of the ownership interests in the entity on a fully consolidated basis (referred to as a "beneficial owner")
Certain persons involved with the filing of documents creating the entity (or, in the case of a foreign entity, registering the entity to do business within the U.S.) with relevant State or Tribal authorities (referred to as the "company applicant")
The reports must include information about the companies and about their beneficial owners and applicants, including full legal name, address, state or tribal jurisdiction of formation, IRS taxpayer identification number birth date and other details. Willful failures to report are punishable by fines of $591 a day and up to $10,000, and two years in prison.
FinCEN began accepting reports on January 1, 2024. It is anticipated that it will cost reporting companies with simple management and ownership structures — which FinCEN expects to be the majority of reporting companies — approximately $85 to prepare and submit an initial BOI report.
Professional counsel can assure your company properly complies with required BOI reporting. An experienced business attorney can provide comprehensive services that include:
Assessment and identification — Determining which entities and individuals need to be reported
Report preparation and filing — Ensuring accurate and timely submission of BOI reports using FinCEN's e-filing system
Exemption analysis — Identifying potential exemptions to streamline compliance
Note that enforcement of the rule is in flux due to a federal district court decision in March 2024, holding that the CTA is unconstitutional. FinCEN has announced that while the ruling is being appealed, it will not enforce the BOI requirements against the plaintiffs, which include the National Small Business Association (NSBA) and its 65,000 members. It is unclear now this will affect enforcement nationwide.
The business lawyers at Gesmonde, Pietrosimone & Sgrignari, L.L.C. in Hamden and East Haven advise companies throughout Connecticut on regulatory compliance and other matters. For a consultation, please call 203-745-0942 or contact us online.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
Attorney Advertising. This website is designed for general information only. The information presented at
this site should not be construed to be formal legal advice nor the formation of a lawyer/client
relationship.
[ Site Map ]