Business Owners: U.S. Beneficial Ownership Information Registry Is Open, Now What?

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Attention Business Owners: U.S. Beneficial Ownership Information Registry Now Active – What's Next for Your Business?

As the U.S. Department of the Treasury’s Financial Crimes Enforcement Network initiates the acceptance of business registry reports, questions are starting to trickle in as attention is being spotlighted on this legislation.

Before proceeding, it's crucial to note that scammers are actively targeting through fraudulent emails and correspondence attempting to deceive you into filing and paying. Stay vigilant against any solicitations or phone calls asking for payment.

Essential Insights: Unveiling the Corporate Transparency Act for Small Businesses

The Corporate Transparency Act, enacted 2021, mandates domestic and foreign businesses to disclose ownership details to governmental authorities that conduct business inside The United States. As of January 2024, the U.S. Beneficial Ownership Information Registry Is Now Accepting Reports and enforcing registration.

Understanding this legislation and its possible repercussions is vital for small businesses. Failure to file or update this report could result in criminal or civil penalties.

Who is considered a beneficial owner of a company?

An individual qualifies as a beneficial owner if they directly or indirectly have a significant ownership stake in a company. This person either has a major influence on the reporting company’s decisions or operations, owns at least 25% of the company's shares, or has a similar level of control over the company's equity.

Existing Companies Have One Year to File; New Companies Must File Within 90 Days of Creation or Registration

Filing is simple, secure, and free of charge. Companies that are required to comply (“reporting companies”) must file their initial reports by the following deadlines:

Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.

Beneficial ownership information reporting is not an annual requirement. A report only needs to be submitted once, unless the filer needs to update or correct information. Generally, reporting companies must provide four pieces of information about each beneficial owner:

name;
date of birth;
address; and
the identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.

The company must also submit certain information about itself, such as its name(s) and address. In addition, reporting companies created on or after January 1, 2024, are required to submit information about the individuals who formed the company (“company applicants”).

Who Has To File?

According to Fincen.gov F.A.Q's, if you answer YES to any one of these questions below, then you must report / register your business.

Q: Under what law was the company created or formed?

Is a corporation
Limited Liability Company
Filing documents with a Secretary of State (sunbiz.org in Florida)

However, March 1, 2024 witnessed a significant milestone as a federal judge declared the Corporate Transparency Act unconstitutional, culminating a 16-month-long legal dispute spearheaded by the National Small Business Association. This landmark decision was supported by the S-Corporation Associates of America and the members of the Main Street Employers Coalition.

In its verdict, the Court emphasized that corporations are established under state law, highlighting that the concerns raised by Congress in the Corporate Transparency Act (CTA) regarding foreign money laundering and the necessity of collecting Beneficial Ownership Information (BOI) for U.S. national security interests were insufficient grounds to justify regulating the domestic activity of incorporation under Congress' foreign affairs powers.

While acknowledging Congress' authority under the Commerce Clause to enact legislation regulating commercial intermediaries like banks, the Court referenced Supreme Court precedents that upheld aspects of the Bank Secrecy Act (BSA). However, the Court found the CTA distinct from the BSA's regulation of financial institutions, as those institutions engage in moving funds in foreign and interstate commerce. The Court dismissed the government's argument that state-registered entities would likely participate in interstate commerce, stating that mere incorporation under state law, without additional factors, did not implicate the Commerce Clause.

In rendering its decision, the Court narrowly focused on the question at hand: "Does Congress have authority under the Commerce Clause to regulate non-commercial, intrastate activity when certain entities, which have availed themselves of States' incorporation laws, use the channels of commerce, and their anonymous operations substantially affect interstate and foreign commerce?" The Court concluded that Congress does not possess such authority.

As of now, you are required to file. While having a small waiting period to see how this plays out by Jan 2025. New companies have only have 90 days.

see The Financial Crimes Enforcement Network Press Release Here

See The Beneficial Ownership Information (BOI) Here

GET STARTED HERE

This is no way constitutes any legal advise, simply for informational purposes only to help you be informed.

Do you think this is beneficial for our country?