Manufacturers: Make Sure You Have Met Your BOI Filing Requirement!!

The deadline is fast-approaching for filing Beneficial Ownership Information (BOI) with the federal government. The deadline for existing businesses is January 1, 2025, so you should get this done in December! Compliance is especially important for MARPA’s smaller members, as they are the most likely to have filing requirements.

The Corporate Transparency Act (CTA) was established to prevent individuals with malicious intent from hiding or benefiting from the ownership of U.S. entities, a tactic that has been used to facilitate illegal operations (including the acquisition of aircraft parts intended for diversion to Russia).  

Who Must Comply?

The reporting requirement applies to: U.S. corporations, LLCs, other entities formed under state or tribal law, and foreign entities registered to conduct business in the United States.

There is no small business exception, but there is a large business exception. This large business exception applies to companies that have (1) more than 20 full-time employees in the United States, and (2) domestic gross receipts or sales exceeding $5 million, and (3) an operating presence at a physical office within the United States.  This is the opposite of most laws, where there may be a small business exception. 

• Identify the Beneficial Owner(s)

A beneficial owner is defined as anyone who either (a) exercises substantial control over the business, or (b) owns or controls at least 25% of the ownership interests.

• Collect Required Information

Companies must provide four pieces of information about each beneficial owner: (1) name; (2) date of birth; (3) address; and (4) the identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe.  If none of those documents exist, a non-expired foreign passport can be used.  An image of the document must also be submitted. 

Additionally, companies established on or after January 1, 2024, must provide information about the individuals who formed the company, referred to as “company applicants.”

• Submit the Report by its Deadline

Filing is simple, secure, and free of charge.  Companies can submit their report through the Beneficial Ownership Information (BOI) E-Filing System.  Below is a breakdown of the key deadlines:

• Existing businesses: Must report by January 1, 2025 (that is just one month away!).
• Businesses created in 2024: Have 90 days from their formation date to report.
• Businesses created starting in 2025: Must report within 30 days.
• Information should be updated as necessary

Beneficial ownership information reporting is not an annual requirement.  A report only needs to be submitted once, unless the filer needs to update or correct information.

Consequences of Non-Compliance

Non-compliance with the reporting requirements can result in significant penalties.  Civil fines may amount to $500 for each day the violation persists, while criminal penalties could include fines of up to $10,000 and possible imprisonment for up to two years.  Furthermore, senior officers of the company may also be held responsible for any reporting failures.