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U.S. Department of Treasury’s Beneficial Ownership Information Reporting Rule takes effect in 2024

U.S. Department of Treasury’s Beneficial Ownership Information Reporting Rule takes effect in 2024

Article by Katherine Pandelidis Granbois, Esq., and Andrew S. Walls, Esq. - Saxton & Stump, Business and Corporate

An important federal law that is affecting most U.S. businesses and requires them to file ownership reporting went into effect on January 1, 2024.

The federal government enacted the Corporate Transparency Act (CTA) in 2021 as part of the National Defense Authorization Act. The purpose of the CTA is to help detect, prevent, and punish terrorist financing, money laundering, corruption, tax fraud and other misconduct through business entities. The CTA requires certain business entities to file beneficial ownership information (BOI) with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN released guidance on the BOI Reporting Rule, and effective January 1, 2024, most new and existing corporate entities in the United States are required to file a BOI report with FinCEN. The BOI Reporting Rule places a significant burden on small to midsize domestic and foreign “reporting companies.” In the trucking industry, many operators are small independent operators operating as single member LLCs, sole shareholder corporations, or sole proprietorships. Because the CTA and BOI reporting only apply to registered entities, only operators registered as entities formed with a state – for example LLCs and corporations – must report. The reporting does not apply to sole proprietorships even if they have a fictitious name registered at the state or a separate EIN.

While there are 23 categories of entities that are exempt from reporting, most of the exemptions only apply to entities who are already subject to similar governmental reporting requirements. One specific exemption that may apply to a larger motor carrier’s situation is the “large operating company” exemption, which exempts an entity from reporting their BOI if the entity employs more than 20 full time employees and it has filed a federal income tax or information return for the previous year demonstrating more than $5MM in gross receipts or sales from sources inside the U.S.

Specific information about the reporting company, each beneficial owner, and the company applicant must be reported to FinCEN. Subject to certain exceptions, each beneficial owner and company applicant must provide their name, date of birth, complete current address, and a copy of a non-expired U.S. passport (or foreign passport, if applicable), state driver’s license, or other identification document issued by a state, local government, or tribe. Reporting companies must identify all “beneficial owners” who directly or indirectly exercise substantial control or own or control at least 25 percent of the ownership interests of a reporting company. There is no fee for submitting a BOI report.

An individual exercises substantial control over a reporting company if the individual meets any of the following qualifications:

• Is a senior officer

• Has authority to appoint or remove certain officers or a majority of directors

• Is an important decision-maker

• Has any other form of substantial control

Any of the following may be an ownership interest:

• Equity, stock, or voting rights

• Capital or profit interest

• Convertible instruments

• Options or other non-binding privileges to buy or sell any of the foregoing

• Any other instrument, contract, or other mechanism used to establish ownership

The timing for filing with FinCEN varies depending on the date of formation. In general, existing reporting companies created or registered to do business in the U.S. before January 1, 2024, must submit initial reports by January 1, 2025. New reporting companies created or registered to do business in the U.S. in 2024 must submit initial reports within 90 calendar days of receiving actual or public notice that the creation or registration of the reporting company is effective. Beginning in 2025, that time period is reduced to 30 calendar days.

If you have any questions about the new reporting requirements or need any other assistance, we are here to help. Contact Kathy Granbois at or Andy Walls at or call us at (717) 556-1000.

Kathy and Andy are hosting a webinar for PMTA members on this filing to answer questions. 

To register for this free webinar, click here.

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