As reflected in its title, the measure seeks to increase transparency around businesses and investors in the U.S. and is principally focused on shell companies formed to hold assets and engage in transactions in the U.S. Traditionally, shell companies shield owners and their activities from regulatory scrutiny, including entities that engage in offshore tax evasion and money laundering.
A key plank of the CTA is the Beneficial Ownership Information Report (BOI). Aspects of the BOI requirement include:
- A BOI must provide identifying information about the individuals who own or control a company, directly or indirectly. The CTA requires individuals who have a major impact on operations or assets, or those who own considerable shares in the company, to be reported.
- The BOI requires information about the company and its owners. This means full legal name, residential address, date of birth, identifying information, and images from passport and driver’s license numbers. The trademark, trade, and legal name of the company must be disclosed along with the U.S. street address, the jurisdiction where formed, and taxpayer information number (TIN). Companies formed after January 1, 2024, must also include the identifying information of the applicants acting on behalf of the company.
- The BOI must be updated within 30 days of any changes to business ownership that render the BOI inaccurate.
- Under the Act, companies that were created prior to January 1, 2024, have until January 1, 2025, to meet the reporting requirements. Entities formed after the first of the year must file a BOI within 90 days. There is no fee to file a BOI. A BOI is submitted through FinCen’s BOI E-Filing website.
- There are 23 exempted types of entities under the CTA. Some of the exempted company types include certain tax-exempt companies, publicly traded entities, investment companies, credit unions and banks, and other types of institutions.
- The collection of BOI information is intended to aid a host of entities and institutions push past the long-time opacity of privately held shell companies. Access to the information is not public but available to federal, state, local agencies, tribal law enforcement, foreign requestors, financial institutions, treasury personnel, and others.
Like other federally mandated reports, violation of the rule to submit an accurate BOI carries a stiff price tag. Offenders can be charged $500 for each day they are out of compliance and risk civil and criminal penalties. When you have concerns about your company structure, purpose, or tax liabilities, speak with an experienced tax attorney.
Trusted tax attorneys assist you with strong respresesntation and guidance on tax avoidance, BOI and FBAR reporting
Serving local and international clients from offices in Chicago and Cleveland, the tax firm of Robert J. Fedor, Esq., LLC helps you respond strategically to questions about offshore tax avoidance, allegations of tax crime, and other tax controversy. Call 800-579-0997 or contact us today.