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Corporate Transparency Act – New Civil Penalties

Steven WalkerJanuary 29, 2024

FinCEN Civil Penalties for Failing to Comply with New Beneficial Ownership Information Reporting Requirements Rise to $591 Per Day.

By Steven Walker and Philip Wolf

The new Corporate Transparency Act does not just impact the big guys. Smaller clients who have formed entities may be subject to the reporting obligations.  And now, effective January 25, 2024, FinCEN announced that whoever fails to file Beneficial Ownership Information Reports (“BOI Reports”) could owe $591 per day of non-compliance (up from $500 per day).[1] The cap on this penalty remains $10,000, and failure to file BOI Reports can still also result in criminal penalties of up to 2 years imprisonment.[2] The fine increased as a result of the Federal Civil Penalties Inflation Adjustment Act of 1990, and it is possible that that amount could increase in the future.[3]

FinCEN’s announcement is one of many since the agency started requiring that certain reporting entities submit BOI Reports.[4] These BOI Reports detail information about the beneficial owners and applicants of select corporations, limited liability companies, and other similar entities.[5] There are 23 exceptions to these reporting requirements, such as those for publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.[6] BOI Reports are meant to help FinCEN prevent bad actors from utilizing shell companies to hide their identities and to launder funds from illicit activities in the United States.[7]

Entities created in 2024 have 90 calendar days after they are notified of their creation or registration to submit required reports detailing information about their beneficial owners and applicants.[8] Entities created starting January 1, 2025 will have 30 days.[9] FinCEN has prepared frequently asked questions about the Beneficial Ownership Information Reporting Requirements which are worth a read.[10] Anyone who is concerned about possibly not complying with the new FinCEN rules should consider contacting competent counsel.

[1] 31 U.S.C. 5336(h)(3)(A)(i), as modified by 89 F.R. 4820. For more information see 182 TAX NOTES FEDERAL 841 (JAN. 29, 2024).

[2]  31 U.S.C. 5336(h)(3)(A)(i)-(ii).

[3]  89 F.R. 4820 (Jan. 25, 2024).

[4] 87 F.R. 59498 (Sept. 30, 2022).

[5] See FinCEN BOI FAQ C.1.

[6] See FinCEN BOI FAQ C.2.

[7] FinCEN, “Beneficial Ownership Information Reporting Rule Fact Sheet” (Sept. 29, 2022).

[8] 88 F.R. 83499 (Nov. 30, 2023), see also FinCEN BOI FAQ B.1.

[9] Id.

[10]  See FinCEN BOI FAQs. See also, 182 TAX NOTES FEDERAL 841 (JAN. 29, 2024).