All corporations and LLCs must report beneficial ownership

In 2021, Congress passed the Corporate Transparency Act (“CTA”) based on its “sense” that a “clear, federal, standard for incorporation practices” is required to prevent “malign actors” from concealing their ownership of business entities to engage in money laundering, because “most or all States do not require information about beneficial owners of the” business entities formed under state law.  As a result, the CTA requires private corporations, limited liability companies, and other business entities formed under state or tribal law to report to the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury certain information about each beneficial owner of the entity.  To learn more about the law, please click here.

Our fee is $115 to file the initial FinCen BOI filing; and our FinCen update service is $45 per year.  Our FinCen services are available only for entities enrolled in our Entity Management service.

FinCEN is proposing a massive data-gathering regime encompassing nearly every private business entity formed or registered to do business in the United States. Reports concerning beneficial ownership information of such entities will have to be filed by every “reporting company.”  The term “reporting company” is defined to include both a “domestic reporting company”—any corporation, limited liability company, or other entity that is created by the “filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe”—and a “foreign reporting company”—any corporation, LLC, or other entity formed under the law of a foreign country and registered to do business in any State or tribal jurisdiction by the filing of such a document.

For each beneficial owner, the reporting company will have to provide to FinCEN the individual’s full legal name, date of birth, complete current address, and a unique identifying number from a current U.S. or foreign passport or State driver’s license.  The reporting company will also have to provide an image of the identification document that “includes both the unique identifying number and photograph in sufficient quality to be legible or recognizable.” All of this information will have to be kept up-to-date with FinCEN, so that any time there is a change in who is a beneficial owner or in any of the information as to an existing beneficial owner or company applicant (such as a change of address or even a new driver’s license or passport, which must be “non-expired”), the reporting company will have to file an updated report within 30 days of the date when the change occurs.

Compliance with the new reporting requirements will be essential. Under the CTA and the proposed regulations, it will be unlawful for any person to willfully provide, or attempt to provide, false or fraudulent beneficial ownership information, including a false or fraudulent identifying photograph or document, or to willfully fail to report complete or updated beneficial ownership information, to FinCEN. The potential penalties are substantial: a civil penalty of up to $500 for each day that the violation continues or has not been remedied, and a fine of up to $10,000 or imprisonment for up to two years, or both.

The following deadlines apply to all entities:

• All entities formed prior to January 1, 2024, must file an initial report by December 31, 2024
• All entities formed after January 1, 2024, must file an initial report within 90 days of the formation date
• All entities must file an updated report within 30 days of the change to the information reflected on the initial report.

FinCen requires an updated report to be filed whenever any change occurs regarding the data on the previously submitted report (https://eminutes.com/updating-beneficial-ownership-information-previously-filed-with-fincen-will-require-vigilance).   The law not only requires updates when there are changes to corporate information (e.g.,  principal place of business, mailing address, officers, directors), it also requires updates when there are changes to personal information of the benefical owners (e.g, residential address, government ID, etc.).  To add even more nuance, some insignificant changes do not need to be reported, but making the determination involves diligently analyzing the changes (which involves substantial attorney time).

Our FinCen update service is $45 per year.  The annual fee will be charged at the time our entity management fee is renewed.

For January 2025 entity management renewals, our FinCen Update service will include the following:

• When a government ID expires, we will reach out to ask for an updated ID.  A new ID can be submitted securely in our portal. In all cases, we will file an updated FinCen report (without regard to whether change meets the threshold for a new filing)
• We will use the trigger of the ID expiration date to ask if the beneficial owner’s residential address has changed, and update it with FinCen accordingly
• At any other time during the year, if a Beneficial Owner’s residential address changes, please reach out to us.  There will be no additional charge for FinCen updates
• During the year, when there is a change to any corporate information (principal place of business address, mailing address, officer/director/manager change), there will be no additional charge for the FinCen update
• When a minor who owns shares or membership interest turns 18, there will be no additional charge for FinCen updates.  Ultimately, it is our intention to monitor the birthdates of minors in our system, but at this time we ask that our clients please reach out to us to tell us when a minor turns 18

While filing FinCen Updates is required by law, enrollment in our FinCen update service is not mandatory.  Any client can select to opt-out of the FinCen Update service.  If you wish to opt out, please email us.  The FinCen Update service is also complicated.  We are learning how to best deliver this service efficiently, so your feedback is very sincerely appreciated.

Our system monitors the expiration dates for government IDs.  We use the trigger of the ID expiration date to update the government ID and residential address.  When a government ID expires, we will proactively send a link to the client.  A new ID (and updated residential address) can be submitted securely in our portal. In all cases, we will file an updated FinCen report (without regard to whether change meets the threshold for a new filing)

To be eligible to be included in our FinCen Update service, the following requirements apply:

• The entity must be enrolled in our entity management service
• We must have an initial FinCen filing transcript on file (filed by us or by others)
• If the entity has other entities that are shareholders, members, or managers, each entity that is part of the structure must be enrolled in our entity management service

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