Dear Clients,
The purpose of this letter is to inform you about a new change in the law that may affect your business.
The Corporate Transparency Act is a federal law that mandates that millions of entities begin reporting their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). For businesses formed before the year 2024, this report must be filed before January 1, 2025.
The requirement to file a BOI report is binding on many types of domestic and foreign entities doing business in the United States. However, there are some exceptions. Most notably, if your business is either: (i) a large operating entity that employs more than 20 people in the U.S., had a gross revenue or sales of over $5 million on its 2024 tax return, and has a physical office in the U.S; (ii) a publicly traded company; or (iii) is categorized as one of several types of industry institutions specified in the law, such as certain financial and investment companies and certain registered companies in the industries of insurance, accounting, non-profit, and government; then your business may be exempt from this filing requirement.
The BOI report will require some of the following information: (i) business information, such as full legal name, trade name or assumed name, business address, state of formation, and IRS Tax Identification Number; and (ii) personal information about beneficial owners, such as name, birthdate, address, and acceptable identification documents. Beneficial owners are, with some exceptions, all individuals who directly or indirectly exercise substantial control over the entity or own or control not less than 25 percent of the ownership interests of the entity.
The penalties for neglecting to file a BOI report may amount to $500 a day, or in some cases, criminal penalties. To comply with this requirement, please visit FinCEN’s website at www.fincen.gov/boi before January 1, 2025, and follow the reporting instructions. There is no fee for filing the BOI report. You may also contact Delaney Corporate Services at 800-717-2810 to retain assistive services in connection with your entity’s filing and reporting.
Please be advised that after filing an initial BOI report, if your entity undergoes changes that affect the submitted report, a subsequent BOI report must be filed within 30 days of such business changes. Additionally, any new entities formed after January 1, 2024, must file the report within 90 days of formation. The information disclosed in a BOI report may lawfully be accessed by government agencies and financial institutions.
Separately, the New York Transparency Act, a similar state law, is set to become effective in 2026. This law will require only limited liability companies to file separate BOI report with the New York Department of State, beginning on January 1, 2026, and to file an annual updated report every year thereafter.
If you would like legal advice on whether your business must file this report, whether a specific individual must be included in this report, or regarding another question, please contact Weiss Zarett Brofman Sonnenklar & Levy, P.C.
See below for more information.
