Corporate Transparency Act: Deadlines & Penalties

The Corporate Transparency Act (CTA) takes effect January 1, 2024. When it does, deadlines for reporting come into play. In this CTA information series article, the discussion focuses on timing for reporting companies and the penalties for failure to comply.

When Is the Initial BOI Report Due?

The filing deadline for a reporting company’s initial “beneficial ownership information” (BOI)  report depends on when the reporting company was formed or was first qualified to do business in the United States. If the reporting company was formed or qualified before January 1, 2024, it has one year—until January 1, 2025—to file its initial BOI report.

Reporting companies formed or qualified during 2024 must file their initial BOI report within 90 days of the earlier of the following:

• The date on which the reporting company receives receipt of actual notice that its formation or qualification has become effective.
• The secretary of state or similar filing office provides public notice of its formation or qualification.

Reporting companies formed or qualified on or after January 1, 2025, have 30 days to file an initial BOI report.

The 30-day window extends to reporting companies that were previously exempt from the reporting requirements of the CTA. When a reporting company ceases to qualify for one of the CTA’s 23 exemptions, it must file its initial BOI report within 30 days after becoming no longer exempt.

Reporting companies should also note that BOI reports will not be accepted by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) prior to January 1, 2024.

When Are BOI Report Updates Needed?

Reporting companies must file updates to previously filed BOI reports if any of the required information  on the reporting company or its beneficial owners changes, or the reporting company identifies inaccuracies in previously filed BOI reports. Changes to information on company applicants, however, do not require an updated BOI report. Reporting companies must report changes such as:

• Change to information regarding the reporting company
• The reporting company’s qualification for an exemption to the CTA’s definition of “reporting company”
• Change in beneficial ownership regarding who is a beneficial owner or in the reported BOI regarding a particular beneficial owner
• The transfer of a beneficial owner’s interest after death (after the beneficial owner’s estate is settled)
• Change to a beneficial owner’s name, date of birth, address, or unique identifying number on their identifying document

All updates to previously filed BOI reports must be filed within 30 days of the change in information necessitating the update. Example scenarios in which a reporting company must file an updated BOI report:

• The reporting company files a new “doing business as” name.
• The company appoints a new chief executive officer.
• A beneficial owner changes their address.
• A minor child (whose information was previously not required to be reported) reaches the age of majority.

This 30-day window also applies to changes in information submitted by an individual in order to obtain a FinCEN Identifier and to correct inaccuracies identified in the initial BOI report. The reporting company must correct such inaccuracies within 30 days of becoming aware or having reason to know the information previously filed was inaccurate.

No penalties will be assessed for filing an inaccurate BOI report if the same is corrected within 90 calendar days of when it was filed (and still within 30 days of becoming aware of or having reason to know of the inaccuracies).

Reporting companies should also note that there is no “materiality” threshold on their obligation to report. No matter how innocuous a change seems, if it is a change to information required to be reported, an updated BOI report must be filed.

What Are the Penalties for CTA Noncompliance?

The CTA created a “safe harbor” from penalties if reporting companies correct an inaccurate BOI report within 90 days of when it was filed. This safe harbor does not, however, extend to inaccuracies made

• for the purpose of evading the CTA’s reporting requirements or
• known to the filer at the time of the report’s filing.

For example, a beneficial owner could refuse to provide information with the knowledge that the reporting company would not be able to provide complete BOI to FinCEN. Or an individual could provide false information with the knowledge that such information is to be reported to FinCEN. In such event of noncompliance, FinCEN may pursue civil or criminal penalties.

If a person willfully fails to report complete or updated BOI to FinCEN or willfully provides (or attempts to provide) false or fraudulent BOI, FinCEN may pursue civil penalties of up to $500 for each day the violation continues or criminal penalties such as a fine of up to $10,000 or two years imprisonment. These penalties may also apply to reporting companies and individuals causing reporting companies not to report or against any of the senior officers of the reporting company.

Read the full series of articles to get more details about individual elements and the requirements of the Corporate Transparency Act. Go to Nyemaster’s Corporate Transparency Act Information Hub.

Explore the elements of the CTA with each article in the series:

• What Entities Are Required to Report?
• Who Is a Beneficial Owner? 
• Who Are Company Applicants?
• What Information Needs to be Reported?

Contact your Nyemaster attorney to discuss the CTA’s reporting obligations for your business.