Gift Shop Plus Winter 2024

New Law Alert: Beneficial Owner Information Reporting By Angie Avard Turner

In 2021, Congress passed a law called the Corporate Transparency Act. This law creates new requirements for someone classified as a beneficial owner to report certain information to the U.S. government. The law was created to make it more difficult for those trying to hide money earned through illegal means.

BENEFICIAL OWNER INFORMATION (BOI) DEFINITION

Beneficial owner information is defined as information about an individual who directly or indirectly owns or controls a company. This is demonstrated by the beneficial owner exercising substantial control over the business or by controlling at least 25% of the ownership interest.

Substantial control can be achieved in four different ways:

1. The individual is a senior officer (the company’s president, chief financial officer, general counsel, CEO, chief operating officer or any other officer who performs a similar function).
2. The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
3. The individual is an important decision-maker for the reporting company.
4. The individual has any other form of substantial control over the reporting company through the Financial Crimes Enforcement Network (FinCEN) Small Entity Compliance.

WHO HAS ACCESS TO BOI?

According to the law, FinCEN will administer and monitor the data. Federal, state and local government, as well as certain foreign officials who submit a request to FinCEN, may be authorized to have access to information and activities as it relates to national security, intelligence and law enforcement.

REPORTING PROCESS

The reporting process did not open until 2024. If someone owns a company that was created before Jan. 1, 2024, then that reporting company will have until Jan. 1, 2025, to file the BOI report.

If a company is created after Jan. 1, 2024, then it will have 30 days to file the BOI. The 30 days will begin running when the company receives notice that the registration is effective or after their Secretary of State’s office, or similar office, provides public notice of the company’s creations, whichever happens earlier. There is no filing/reporting fee; however, there is a penalty if one does not report when it is appropriate.

Companies that are required to report are domestic companies, which are corporations, limited liability companies or any other entity that forms by filing with their Secretary of State’s office or some similar government agency.

A second type of company is a foreign reporting company. This is any company formed outside the U.S. but does business within the U.S. These business dealings within the U.S. would be evidenced by filing documentation with a Secretary of State’s office or a similar entity.

The information that must be reported is information about the business and its beneficial owner, including:

1. Its legal name.
2. Any trade names, “doing business as” (d/b/a),
   or “trading as” (t/a) names.
3. The current street address of its principal place of business if that address is in the U.S., or, for reporting companies whose principal place of business is outside the U.S., the current address from which the company conducts business in the U.S.
4. Its jurisdiction of formation or registration.
5. Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign
   jurisdiction and the name of the jurisdiction).
6. Whether it is filing an initial report, or a correction or an update of a prior report.

ENFORCEMENT OF THE LAW

There will be strict enforcement, both civilly and criminally for non-compliance.

Willfully providing false information or not filing at all may result in civil penalties of up to $500 per day of non-compliance. Criminal penalties may be up to $10,000 in fines, imprisonment up to two years or both. If something is reported incorrectly, a reporting company has up to 90 days to amend the report on an initial filing. Once you have filed a report, you have 30 days to correct any inaccuracies from the time an inaccuracy was discovered.

If you are unsure what to do, you should consult an attorney to receive advice on how to proceed.

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