Beginning on January 1, 2024, business entities are now required to report certain information regarding their beneficial owners to the Federal Government. The newly enacted Corporate Transparency Act (“CTA”) requires business entities in existence before January 1, 2024, to file Beneficial Ownership Information (“BOI”) with the U.S. Department of Treasury prior to January 1, 2025. For businesses established on or after January 1, 2024, the filing of the BOI must take place within 30 calendar days after registering the entity.

The CTA applies to a broad range of business entities, and only twenty-three specific exemptions apply. Pursuant to the CTA, beneficial owners of business entities must report certain personal information to the U.S. Treasury Department. Beneficial owners are also defined under the CTA.

If you have any questions about the CTA, or would like us to discuss your obligations in more detail, please contact our office at your earliest convenience, at jsaltzman@saltzman-law.

New Federal Reporting Requirement for BOI

Exemptions

1. Securities reporting issuer
2. Governmental authority
3. Bank
4. Credit union
5. Depository institution holding company
6. Money services business
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity
21. Large operating company
22. Subsidiary of certain exempt entities
23. Inactive entity

Beneficial Owner

If your company is a reporting company, your next step is to identify its beneficial owners. A beneficial owner is any individual who, directly or indirectly:

• Exercises substantial control over a reporting company;
• OR
• Owns or controls at least 25 percent of the ownership interests of a reporting company.

An individual might be a beneficial owner through substantial control, ownership interests, or both. Reporting companies are not required to report the reason (i.e., substantial control or ownership interests) that an individual is a beneficial owner. A reporting company can have multiple beneficial owners. For example, a reporting company could have one beneficial owner who exercises substantial control over the reporting company, and a few other beneficial owners who own or control at least 25 percent of the ownership interests of the reporting company.

A reporting company could have one beneficial owner who both exercises substantial control and owns or controls at least 25 percent of the ownership interests of the reporting company. There is no maximum number of beneficial owners who must be reported.

FinCEN expects that every reporting company will be substantially controlled by one or more individuals, and therefore that every reporting company will be able to identify and report at least one beneficial owner to FinCEN. The following four sections will assist you in determining your company’s beneficial owners. If an individual qualifies as a beneficial owner, information about that individual must be reported to FinCEN in a reporting company’s BOI report.