(845) 764-9656     |    Schedule Consultation
Facebook
X (Twitter)
YouTube
LinkedIn
Instagram
Open/Close Menu World Class Attorneys, Hudson Valley Roots

New Disclosure Requirements Are Coming for Company Ownership

If you have a corporation or limited liability company, or plan to open a new one, you must be aware of new federal regulations that impose reporting requirements beginning in 2024. These regulations will require disclosure of the beneficial owners of the entity, that is, those individuals who directly or indirectly own or control the entity.

Background

In 2018, Congress adopted legislation to require that legal entities report the identities of individuals who have a beneficial ownership in certain businesses to the Financial Crimes Enforcement Network (“FinCEN”) within the United States Department of the Treasury. This legislation combats money laundering and other criminal activity resulting from individuals using anonymous legal entities. Regulations have now been released which cover corporations and limited liability companies with 20 or fewer employees with receipts under $5,000,000. Entities that believe they are exempt must file a certification with FinCEN to explain their exemption status. Covered companies must file beneficial ownership information (“BOI”) reports with FinCEN using an electronic filing system that is still being developed.

Reportable Information

BOI reports require three types of information: (i) company information, (ii) information on all the beneficial owners of the company, and (iii) information on applicants, that is, those who file the BOI reports.

As to the company information, a reporting company must disclose (i) its legal name, (ii) any trade names (i.e., “doing business as” names), (iii) the current street address of its principal place of business, (iv) its jurisdiction of formation or registration and (v) its Taxpayer Identification Number (TIN, also referred to as EIN).

As to the beneficial owners, a reporting company must file (i) the individual’s name, date of birth, and residential street address, (ii) a unique identifying number from an acceptable identification document (e.g., a U.S. passport or driver’s license) and (iii) the name of the state or jurisdiction that issued the identification document.

As to the applicants, the information required is the same as for the beneficial owners.

FinCEN will implement security measures to ensure that the information contained within the reports is not available to the public. Rather, the information contained within BOI reports will be accessible by law enforcement agencies subject to stringent access requirements and safeguards imposed by the federal Corporate Transparency Act.

Additionally, while there will be no fee charged by FinCEN for the electronic filing of BOI reports, the agency estimates that the cost of preparing an initial BOI report can range from $85.14 – $2,614.87 based on the complexity of a company’s beneficial ownership structure.

Reporting Dates

Covered entities must be aware of 4 key reporting dates to ensure compliance with BOI reporting obligations:

(1) Companies created or registered to do business in the United States before January 1, 2024 must file BOI reports by January 1, 2025.

(2) Companies created or registered to do business in the United States on or after January 1, 2024 must file BOI reports within 30 days of company creation.

(3) When a change to information in a previously filed BOI report occurs, companies have 30 days to file an updated BOI report.

(4) When an inaccuracy exists in a previously filed BOI report, companies must file corrected BOI reports within 30 days of becoming aware of, or having reason to know of, the inaccuracy.

Failure to file BOI reports within the above timeframes can result in fines of up to $10,000 and/or up to 3 years of prison.

Legal Assistance

When preparing BOI reports, attorneys can assist companies in several ways. First, an attorney can help to determine if a company is exempt from BOI reporting. The Corporate Transparency Act exempts 23 types of entities from BOI reporting. These exempt entities are mostly in highly regulated industries that already have disclosure obligations, such as banks, broker/dealers, and insurance companies. Most small businesses are not exempt from the new BOI reporting requirements.

Attorneys can also help companies prepare initial submittals of their BOI reports. Legal assistance can also be provided for companies who must file subsequent updates to their BOI reports when previously filed information changes or is discovered to be inaccurate.

This is not to be considered legal advice.  You should contact an attorney to discuss your specific situation.


Alexendar G. Main is Of Counsel at J&G Law.  He concentrates in land use and municipal law.
He can be reached at 845-764-9656 and by email.

Pay your Invoice Credit Cards   

©2023 J&G Law, LLP. All rights reserved.

J&G Law, LLP