Subject: Understanding the CTA Beneficial Ownership Reporting Rules
Dear [Business Owner’s Name],
I am writing to inform you about an important regulatory update that could impact your business. The Corporate Transparency Act (CTA) has introduced new beneficial ownership information (BOI) reporting requirements that may affect how your company operates and reports its ownership structure.
What is the CTA? The Corporate Transparency Act is designed to enhance transparency in corporate ownership by requiring certain businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The primary goal is to combat money laundering, terrorist financing, and other illicit activities by increasing the visibility of who controls and profits from companies.
Who Must Report? Under the CTA, most corporations, limited liability companies (LLCs), and other similar entities registered to do business in the United States will need to comply with these reporting requirements. This applies to both domestic and foreign entities that are registered or doing business within the country. There are some exemptions, such as for certain regulated entities and large operating companies with substantial employee bases and revenue.
Required Entity Information. Businesses subject to the CTA must report the following details about the entity:
- Entity Name:
The full legal name of the entity as registered.
- DBA (Doing Business As) Name (if applicable):
Any other names under which the entity operates.
- Entity Address:
The principal place of business.
- Formation State:
The state or jurisdiction where the entity was formed or registered.
- Formation Date:
The date the entity was created or registered.
- Entity Type:
The type of entity (e.g., corporation, LLC, partnership).
- Tax Identification Number:
The entity’s Employer Identification Number (EIN), if applicable.
Required BOI Information. Businesses subject to the CTA must report the following details for each beneficial owner:
- Full legal name
- Date of birth
- Residential or business address
- Unique identification number (e.g., passport number or driver’s license number)
Beneficial owners are defined as individuals who, directly or indirectly, exercise substantial control over a company or own or control at least 25% of the company’s ownership interests.
Reporting Deadlines. Entities existing prior to January 1, 2024, have until January 1, 2025, to file their initial reports. New entities formed or registered in 2024 must file within 90 days of formation or registration. Entities formed on or after January 1, 2025, must report their beneficial ownership information within 30 days of formation or registration.
Updating reports. Entities must update their BOI reports within 30 days of any changes to their beneficial ownership information.
How to file. BOI reports must be filed electronically. FinCEN’s e-filing portal, available at https://boiefiling.fincen.gov/, provides two methods to submit a report:
- By filling out a web-based version of the form and submitting it online, or
- By uploading a completed PDF version of the BOI report.
FinCEN filing fee. There is no fee for filing the report.
Tax Professional’s Role. It is important to note that I can provide valuable advice and guidance on various aspects of tax compliance and financial reporting, we will not be responsible for filing or updating the BOI report with FinCEN on your behalf. The responsibility for ensuring accurate and timely submission of the BOI report lies with you, the business owner.
Why This Matters. Compliance with the CTA is crucial to avoid potential penalties and ensure that your business operates within the bounds of the law. Penalties for non-compliance can be significant, including substantial fines and potential criminal charges.
If you have any questions about the CTA and the related reporting requirements, please do not hesitate to reach out. Ensuring that your business is compliant with these new rules will help protect it from legal and financial risks.
Thank you for your attention to this important matter.
Best regards,
[Your Full Name]
[Your Position]
[Your Contact Information]
[Your Company’s Name]