What Are The Consequences Of Submitting Inaccurate Information In CTA Filings?

Complete Guide To Corporate Transparency Act Compliance & Reporting

The Corporate Transparency Act was mandated in 2021 and took effect on January 1, 2024. It was created to prevent illegal acts such as money laundering, terrorist financing, and tax evasion which criminals did behind the veil of an LLC or corporation.

The Corporate Transparency Act requires that reporting companies report their beneficial owner information (BOI) to the Financial Crimes Enforcement Network. It impacts 32 million businesses throughout the U.S. There are deadlines and penalties for not complying so it is important to be aware of beneficial owner reporting details.

What Are The Consequences Of Submitting Inaccurate Information In CTA Filings?

Understanding Beneficial Owner Reporting Under The Corporate Transparency Act

Who Has To Report?

Businesses that are required to do a BOI report include any business that is registered by the secretary of state, Indian Tribe, or foreign LLCs that do business within the United States. There are 23 exemptions, but they mainly pertain to large corporations that deal in investments, accounting, public utilities, and other entities that already were reporting beneficial owners before the Corporate Transparency Act.

Who is a Beneficial Owner?

A beneficial owner is identified as someone who has substantial control of the business or owns 25% or more of the company. This could include individuals who are senior officers, individuals who make important decisions within the company, or anyone with the power to appoint or remove senior officers. Some entities may have one or two beneficial owners while others may have many.

Am I Required to Report Company Applicants?

Company applicants include anyone who helped register your company with the United States. This could be an accountant or an attorney or someone else. Reporting companies that were registered on or after January 1, 2024, will be required to add company applicants to their BOI report. However, if your company was registered before January 1, 2024, you will not have to add company applicants.

Deadlines For Filing Your Initial BOI Report

There are several different deadlines for BOI reporting depending on when a business was formed or registered with the secretary of state or other governing agency. For businesses registered before January 1, 2024, they have until January 1, 2025, to file the initial BOI report.

Companies that were registered on or after January 1, 2024, have 90 days from receiving notice. Their deadline countdown will start on the date that they receive actual notice or on the date the secretary of state or other filing office gives public notice, whichever comes first.

Companies that are formed on or after January 1, 2025, will have 30 days to file their BOI report. Companies that were previously exempt from the Corporate Transparency Act that become no longer exempt will also have 30 days to report their initial beneficial owner information report.

How To Update Or Amend Your BOI Report: Guidelines & Deadlines

Along with deadlines for filing initial BOI reports, there are also deadlines for updating or changing information about beneficial owners or the company on the BOI reports. This also applies if a reporting company recognizes inaccurate information in their report. Changes that must be reported include:

  • Change to the reporting company such as address change, or other identifying factor
  • If a reporting company no longer qualifies for an exemption
  • When a beneficial owner changes in the reporting company
  • Anytime a beneficial owner’s name, date of birth, address, or other identifying information changes

When a change happens, reporting companies have 30 days to send in the new information to the Financial Crimes Enforcement Network from the date that the change happened.

This 30-day window also includes changes when inaccurate information is identified on the initial BOI report. Reporting companies have 30 days from when they notice the inaccuracy to update the information. Penalties do not apply when the inaccuracy is corrected on time.

Consequences of Failing To Report or Submitting Inaccurate BOI Information

The Corporate Transparency Act recognizes that companies may make a mistake and allows them a timeframe to fix the inaccuracy. However, this grace is not given to those who report inaccurate information willfully.

Willfully not complying to provide an accurate BOI report could look like refusing to provide accurate information because it is too difficult to find or report all beneficial owners. It would also look like intentionally providing false information. Willfully withholding information or providing false information can result in serious penalties.

The penalties for willfully not filing accurate information result in the Financial Criminal Enforcement Network pursuing up to $500 every day of the violation. Individuals responsible for the false information can also face up to a $10,000 fine or 2 years in prison. This applies to individuals standing in the way of reporting companies reporting accurate information as well.

Contact Our Trusted Tax Attorney Company For Quality Service

At Corporate Transparency Act Filing Services we specialize in the intricacies of the CTA and provide high-quality and reliable assistance tailored to your specific needs. Whether you need guidance on compliance or strategic advice to navigate the complexities of the CTA, we have you covered.

Contact us today to benefit from our specialized knowledge and ensure your business remains in full compliance with the Act.


Corporate Transparency Act Filing Service

Corporate Transparency Act Filing Services
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