Corporate Transparency Act

Corporate Transparency Act – Effective January 1, 2024

Overview
The Corporate Transparency Act (“CTA”), which was enacted in 2021 as part of the National Defense Authorization Act, is a federal law that aims to prevent and combat financial crimes by identifying the individuals associated with US companies. Additional information may be found here: https://www.fincen.gov/boi

In order to achieve this goal, the CTA requires that most entities file a Beneficial Ownership Information Report (“BOI Report”) with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. For entities formed prior to 2024, the due date for filing is January 1, 2025. For entities formed in 2024, the due date for filing is 90 days after the formation date. Beginning in 2025, the due date for filing will be 30 days after the formation date.

Information Required to File
The categories of information that will be provided to FinCEN in the BOI Report are (i) company information and (ii) beneficial owner information.

Beneficial owners are individuals who either directly or indirectly: (i) exercise “substantial control” over the company (including senior officers and other decision-makers); or (ii) own or control at least 25% of the reporting company’s ownership interests. The beneficial owner information includes each individual’s name, date of birth, residential address, and identifying document number (passport or driver’s license), as well as a copy of the identifying document. The company information includes its name, address, state of formation, and EIN number.

Note that beneficial owners cannot be companies – they must be individuals. If a company is owned by another entity, then the filing would typically include the beneficial owners to that entity, subject to certain indirect ownership calculations.

How to File
BOI Reports may be submitted to FinCEN directly at the following link: https://boiefiling.fincen.gov/. There is no fee associated with filing the BOI Report directly with FinCEN.

The Immix team can assist in the following ways:

1. Help you determine who the beneficial owners of your company are (at hourly rates); or
2. Help you determine who the beneficial owners of your company are, gather the information required for the company and the beneficial owners, and submit the BOI Report to FinCEN using a platform called CTAComply (at hourly rates + a $35 filing fee).

Frequently Asked Questions

1. 1. • What does this mean for me?
        • Most entities are required to file a Beneficial Ownership Information Report with FinCEN by the end of the year.

1. 1. • Does an attorney/law firm have to submit this filing?
        • No, companies can submit the BOI Report directly to FinCEN.

1. 1. • What is a “Reporting Company”?
        • A Reporting Company is any entity that is required to file a BOI Report.

1. 1. • What is a “Company Applicant”?
        • The Company Applicant information is only required for entities formed after January 1, 2024. It refers to the individual who directly filed the formation documents with the Secretary of State and/or controlled the filing (this is often an individual from our office or filing service). We can provide you with the FinCEN ID number(s) to use for this section of the BOI Report as needed. If a Company Applicant is not required, select #16 for “Existing reporting company” which will disable the fields in that section.

1. 1. • Are the reports publicly available?
        • No, BOI Reports are only available to federal government officials and certain financial institutions for authorized purposes.

1. 1. • Are certain companies exempt from the reporting requirement?
        • Yes, 23 types of entities are exempt. Most commonly in the case of the companies that Immix serves, these would be i) tax-exempt entities (exemption #19), and ii) large operating companies (exemption #21). Please see Section C.2. of the FinCEN FAQ.

1. 1. • What are the criteria for the “large operating company” exemption?
        • The criteria are i) more than 20 full-time employees in the US, ii) has an operating presence at a physical office in the US, and iii) filed Form 1120, 1065, or another applicable form for the previous year demonstrating more than $5,000,000 in gross receipts or sales.

1. 1. • Does my company need to submit a filing if it is exempt from reporting?
        • No, a filing is not required if the company qualifies for an exemption.

1. 1. • Related to determining the beneficial owners, what does “substantial control” mean?
        • According to FinCEN, an individual that directs, determines, or has substantial influence over important decisions exercises “substantial control” over a reporting company. Important decisions include decisions about a reporting company’s business, finances, and structure.

1. 1. • Is this filing annual?
        • No, this is a one-time filing. However, if there is any change to the reported information, the company must file an updated BOI Report within 30 days after the change occurred. This would include, for example, a change to the company name or address, the addition or removal of a beneficial owner, or a change to the provided information for a beneficial owner (e.g., a new address).

1. 1. • What happens if I don’t file?
        • Willful violation of the BOI reporting requirements may subject the individual to civil and criminal penalties, including a fine of up to $500 for each day that the violation continues and up to two years imprisonment.

Additional Information
FinCEN has provided a comprehensive FAQ here: https://www.fincen.gov/boi-faqs.
Please feel free to contact your attorney or our CTA team (cta@immixlaw.com) with any questions related to CTA requirements and Beneficial Ownership Information reporting.