CTA Compliance

Posted by macdonalddesign on January 6, 2024

The Corporate Transparency Act (CTA) went into effect on January 1, 2024, and it requires business owners to file a Beneficial Ownership Information Report (BOIR) with FinCEN unless the business is exempt. As of February 19,2025, all nonexempt businesses must file their initial BOIR by MARCH 21, 2025.

February 19, 2025 update: All nonexempt reporting companies must file their initial Beneficial Ownership Information Report (BOIR) by MARCH 21, 2025. All businesses formed after February 19, 2025, have thirty (30) calendar days to file their initial BOIR.

Reporting to FinCEN

Here is the very, very super general rule about reporting to FinCEN:

If your company is an LLC, corporation or some type of limited partnership (LP) and it has less than 20 full-time employees, it must report to FinCEN.
If your company has 20 full-time employees and its most recent FILED tax returns reported gross receipts of $5 million or more, it is exempt from reporting to FinCEN (large company exemption).

Keep in mind that if either the number of full-time employees decreases to below 20 or the gross receipts are less than $5 million, the large company must report to FinCEN within 30 calendar days of the change. This is why it is IMPERATIVE to have a rigorous CTA compliance program in place so that any changes are identified within the timeframe of reporting them.

Reporting Companies must report their basic information to FinCEN (name, trade name(s) if any, EIN and physical address). The company must also report the personal information (name, residential address, date of birth and provide a copy of an unexpired passport/driver’s license) of its managers, officers, owners with 25% ownership interest or more, or anyone with substantial control of the business.

A Note on Personal Information

Many people are worried about providing their personal identifying information to FinCEN. This is silly. All of the information that is required to be provided is already available to the government. Reporting to FinCEN is annoying and it is one more thing to keep track of as a business owner, but you are not giving out information that the government does not already have. The public has no access to BOIRs so business owners may still remain anonymous.

Personal Information; security; identity;

The CTA is serious.

CTA is Serious; Money; fines; jail; prison;

Unlike many laws that do not have penalties for failing to follow them, the CTA has teeth. Failure to file a Beneficial Ownership Information Report (BOIR) correctly and by a deadline may result in civil fines of $606/day (no cap) and possible jail time. Civil monetary fine amounts adjust annually for inflation so the fine for violating the CTA has increased from $591/day to $606/day effective January 17, 2025.

All nonexempt reporting companies must file their initial Beneficial Ownership Information Report (BOIR) by MARCH 21, 2025. All businesses formed after February 19, 2025, have thirty (30) calendar days to file their initial BOIR.

The OWNERS of the reporting company are PERSONALLY RESPONSIBLE for reporting to FinCEN. The owners of the reporting company will be the ones fined or in extreme cases jailed. This is NOT the time for company owners to put their heads in the sand and delegate this obligation to staff (unless there is a compliance program in place and even then, owners still need to monitor it).

If you own a business, this is just one more thing you are required to do. It is like obtaining and maintaining a business license or filing an annual report if you are required to do so.

CTA compliance is a cost of doing business. If you hire us to handle your BOIR filing or implement a compliance program, be sure to provide your receipt for payment to your tax preparer so that you may maximize your tax deductions. OUR FEES ARE TAX DEDUCTIBLE, CIVIL FINES ARE NOT.

Bad News / Good News!

Bad News

Good News!

The bad news is you probably have to file a Beneficial Ownership Information Report (BOIR) with FinCEN.

The good news is we can help.

The bad news is you still have to be involved.

The good news is we will remind you of any deadlines.

The bad news is that any changes in your BOIR must be reported to FinCEN within 30 calendar days of any change.

The good news is this is NOT an annual requirement.

Really Good News

The really good news is this is an opportunity to make sure your business records are up to date and that your business is legally sound.

Even Better News

The even better news is we can help you. You don't have to learn new law, you don't have to become an expert, we will answer any questions and guide you through the process.

Best Practices for Compliance With the CTA

ANY COMPANY IN EXISTENCE PRIOR TO JANUARY 1, 2024

Any non-exempt company in existence prior to January 1, 2024 has until December 31, 2024 to file its initial BOI report with FinCEN. Unless changes need to be made or things will change before the end of 2024, companies should file their BOI reports as soon as possible.

NEW COMPANIES CREATED AFTER JANUARY 1, 2024

Any new company created after January 1, 2024 has 90 calendar days to file its initial BOI report with FinCEN. The 90 calendar days start to run at the time the company receives notice that the company’s creation or registration is effective. The reporting company must also report the personal information of its Company Applicants (the person who directed the company formation as well as the person who actually filed the formation paperwork).

ANY CHANGES MADE BY THE REPORTING COMPANY AT ANY TIME AFTER FILING THE INITIAL BOI REPORT

If anything changes on the BOI report after it has been filed, the reporting company has 30 calendar days to update the report. Changes include: any address changes of the company or the beneficial owners; or any removal or addition of beneficial owners (including officers, managers, directors or others with substantial control).

FOREIGN COMPANIES REGISTERING TO DO BUSINESS IN THE U.S AFTER JANUARY 1, 2024

Any foreign company registering to do business in the U.S, after January 1, 2024 has 90 calendar days to file its initial BOI report with FinCEN. The 90 calendar days start to run at the time the company receives notice that the company’s registration is effective. The reporting company must also report the personal information of its Company Applicants (the person who directed the foreign company registration as well as the person who actually registered the company).

NEW COMPANIES CREATED AFTER JANUARY 1, 2025

Any new company created after January 1, 2025 has 30 calendar days to file its initial BOI report with FinCEN. The 30 calendar days start to run at the time the company receives notice that the company’s creation or registration is effective.

FOREIGN COMPANIES REGISTERING TO DO BUSINESS IN THE U.S AFTER JANUARY 1, 2024

Any foreign company registering to do business in the U.S, after January 1, 2025 has 30 calendar days to file its initial BOI report with FinCEN. The 30 calendar days start to run at the time the company receives notice that the company’s registration is effective.

COUNTING THE DAYS TO DEADLINE

FinCEN uses calendar days so a deadline can fall on a weekend or a holiday. Given filing with the CTA is all electronic, a BOI report or update may be due and must be filed on a weekend or a holiday.

Before you file your a BOIR with FinCEN, clean your house.

As a business owner (especially a small business owner), general business housekeeping can fall by the wayside as you are busy running the business (as you should be). However, given the tight deadlines for making changes to your Beneficial Ownership Information Report (BOIR), it would be best to make any changes to the management, ownership or structure of your company before you file your company’s BOIR.

You should also make sure that your company’s records at the Corporation Commission and/or the Secretary of State are accurate and up to date so your reporting to FinCEN matches other public records. We are happy to do an analysis of public records and make any changes you need if you do not want to do so. The important thing is it needs to be done.

This is also a great opportunity to update your Operating Agreement, Partnership Agreement or Bylaws. If you do not have any of these, it is time you do. It is also important to implement a CTA Compliance policy so you have active reminders and procedures to maintain accurate records with the CTA. A compliance policy may be very simple or complex depending on the size and structure of your business. WE can help tailor a compliance program to suit your needs.

FinCEN is NOT going to contact you unsolicited.

If you receive a phone call, email or letter that says it is from FinCEN, it is a SCAM and DO NOT RESPOND. If you have doubts, please contact us.

If you are filing your BOIR yourself, there should be NO filing fee. There are many companies out there using domain names that look like FinCEN so that consumers pay them a filing fee. The official website is fincen.gov/boi. You need to input the website directly as the scam websites pop up first when you just google it.

Scammers are out there and they are using business owners ignorance to get their personal information and money.

BE vigilant and STAY educated.

The information provided in this website is meant only as a general description of the current laws as of the date of the writing. It is not meant to be an exhaustive discussion of all the nuances of the law and is intended to be only an overview. Many issues may appear simpler than they are, and an individual should always contact an attorney to obtain a complete, accurate interpretation of the law given the individual's particular circumstances. Thompson Law Group, P.C. makes no representations as to how the law would affect a particular situation and intends only to illustrate areas of concern and give general information.