How to File a Beneficial Ownership Report (BOR) Under the Corporate Transparency Act (CTA)

 

Overview - Beneficial Ownership Report

The Corporate Transparency Act (CTA), effective from January 1, 2024, mandates that most U.S. businesses file a Beneficial Ownership Information Report (BOIR) with the Financial Crimes Enforcement Network (FinCEN). This requirement is designed to enhance transparency and combat the misuse of anonymous shell companies for illicit activities, such as money laundering and tax evasion.

What is a Beneficial Ownership Report (BOR)?

A Beneficial Ownership Report is a filing that identifies and provides key information about the individuals who own or control a reporting company. The aim is to disclose the beneficial owners, defined as individuals who own at least 25% of the entity or exercise significant control over it.

Step-by-Step Guide to Filing the Beneficial Ownership Report

Step 1: Determine if Your Company is Required to File

Under the CTA, any entity that meets the definition of a "reporting company" must file a BOIR unless it qualifies for an exemption. A reporting company is any:

• Domestic corporation, LLC, or similar entity formed by filing a document with a state or tribal office.
• Foreign company registered to do business in the United States.

Exemptions: There are several types of entities exempt from reporting under the CTA, including publicly traded companies, certain large operating companies, tax-exempt entities, banks, and insurance companies. For a complete list of exemptions, see the attached exemption list.

Step 2: Identify the Beneficial Owners

A beneficial owner is any individual who:

• Owns or controls at least 25% of the entity's ownership interests.
• Exercises substantial control over the company (e.g., as a senior officer or director).

You will need to collect the following information for each beneficial owner:

• Full legal name
• Date of birth
• Home address (P.O. boxes or professional addresses are not accepted)
• A valid identification document (e.g., U.S. driver’s license or passport)

Step 3: Prepare the Necessary Information

The report must include:

Company Information:

• Legal name of the entity
• Business address
• State or tribal jurisdiction where the entity was formed or first registered
• Taxpayer Identification Number (TIN)

Beneficial Owner Information:

• Name, 
• date of birth, 
• address, and 
• identification documents for each beneficial owner

Step 4: Choose a Filing Method

Filings can be submitted to FinCEN in one of two ways:

• Online Submission via FinCEN Platform: This is the recommended method for faster processing. Visit the FinCEN Filing Portal and follow the step-by-step instructions.
• PDF Form Upload: Alternatively, you may download a PDF version of the BOIR form, complete it, and upload it via the FinCEN portal. Ensure that you have Adobe Acrobat to fill out the form.

Step 5: Submit the Filing

Once all information is collected and verified, you can proceed to submit the report online. Ensure that:

• All fields are accurately completed.
• Identification documents are uploaded correctly.
• You retain copies of the submission for your records.

Filing Deadlines

For companies created or registered before January 1, 2024, the deadline to file the initial report is January 1, 2025.

For companies created or registered on or after January 1, 2024, the report must be filed within 90 days of formation or registration.

Penalties for Non-Compliance

Failure to file the required report or providing false information can result in significant penalties, including fines and potential criminal charges.

Tips for Small Businesses

Maintain an Updated List of Beneficial Owners: Given the ongoing requirement to update FinCEN if beneficial ownership changes, having a process in place to track these changes is crucial.

Consult with Legal and Financial Advisors: Navigating the requirements of the CTA can be complex. Consulting professionals may help ensure compliance and avoid penalties.

Conclusion

The Beneficial Ownership Report is a critical compliance requirement under the Corporate Transparency Act. By understanding the process and preparing the necessary information, businesses can meet their obligations and contribute to financial transparency efforts.

For more information and to begin the filing process, visit the FinCEN BOI Filing Portal.