Businesses are Now REQUIRED to File Ownership Information with the Federal Government

You may be required to file your company’s ownership/control information with the federal government. This requirement has been added to the law to help the government assess compliance obligations. For some ASA members, a large business exception may apply (see below), but many ASA members will be required to file.

In 2021, Congress enacted the Corporate Transparency Act (CTA). This law requires many companies doing business in the United States to report information about who ultimately owns or controls the business. The CTA was intended to prevent people with malicious intent from hiding the ownership of their U.S. entities to facilitate illegal operations. This has become a concern of many aviation manufacturers who worry about whether their sales might end up in Russia.

A quick history note – the CTA was originally passed in 2020 but it was part of the National Defense Authorization Act and President Trump vetoed that law. His veto was overridden on January 1, 2021 and the bill become Public Law No: 116-283.

Effective January 1, 2024, most businesses in the United States must report information about their beneficial owners. This information is reported to the the Financial Crimes Enforcement Network (FinCEN), which is a bureau within the Treasury Department.

A beneficial owner is any individual who, directly or indirectly:

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

This reporting requirement applies to U.S. corporations and LLCs, as well as other forms of businesses organized under state or Tribal law.  It also applies to foreign businesses that register to do business in the United States (often this means registering with a state).  There is a list of exemptions but most of them are entities that have to register with the government under other laws.

Exception: There is an exemption for large businesses (but not for small businesses).  The large business exemption applies to businesses with (1) more than 20 full time domestic employees, (2) gross domestic receipts exceeding $5,000,000, and (3) an operating presence at a physical office within the United States (please see the regulations for a complete list of the requirements for this exemption). This exception may apply to many of MARPA’s members 

Beneficial ownership information reporting is not an annual requirement. Unless a company needs to update or correct information, a report only needs to be submitted once.

Reports are filed through the Beneficial Ownership Information (BOI) E-Filing System.

The deadline for reporting for existing businesses is January 1, 2025.  Businesses created in 2024 will have 90 days to register under the BOI system and those that are subsequently created – starting in 2025 – will have 30 days for registration.

Failure to report can lead to civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for the failure.

The BOI information is not expected to be publicly available, but it is expected to be available to law enforcement agencies.

Useful Resources:

• Small Entity Compliance Guide
• Treasury Press Release on the Filing Requirement
• Beneficial Ownership Information Page
• Go HERE to file