Corporate Transparency Act

Article Nikki Gilland

The nationwide injunction on beneficial ownership information (BOI) reporting that was lifted on December 23, 2024, appears to be back in place as of December 26, 2024.

Our recommendation remains that reporting companies be prepared to do their BOI reporting before December 31, 2024, so that the companies can comply with the law on a moment’s notice.

Here is a brief recap of the events of this month.

Recall that the Corporate Transparency Act (“CTA”) and its implementing regulations, require certain business entities to report stakeholder information to the Treasury Department’s agency called FinCEN. The CTA, enacted as an anti-money laundering measure, required reporting entities that existed before 2024 to disclose the identities of their beneficial owners—individuals who own or control the business—by Jan. 1, 2025.

  • On Tuesday, December 3, 2024, in a case called Texas Top Cop Shop, Inc. v. Garland, a federal judge in the Eastern District of Texas issued a “nationwide” injunction saying beneficial ownership information reports did not have to be filed until the issues in the case were decided.
  • On Monday, December 23, 2024, a panel of judges from the Fifth Circuit Court of Appeals struck down the nationwide injunction, which meant that reporting companies once again had to file BOI reports. FinCEN issued an alert extending the deadline for reporting by about two weeks.

Now, a different panel of judges from the Fifth Circuit Court of Appeals reinstated the nationwide injunction, through an order issued yesterday, December 26, 2024. This panel will consider the constitutionality of the CTA, and it’s ruling appears to supersede the ruling of December 23, 2024. Thus, once again, it seems BOI reporting is not required by January 1, 2025.

Our recommendation remains that reporting companies be prepared to do their BOI reporting before December 31, 2024, so that the companies can comply with the law on a moment’s notice. There is a chance that the government will seek emergency relief from the U.S. Supreme Court and a ruling could be issued before year-end.

Where can I find more information?

For more information about BOI reporting and access to guidance issued by FinCEN, you can refer to our previous article on the topic here:

What is “Beneficial Ownership Information” reporting, and why do I care?

Article Dean Dorton

Success in the equine industry boils down to a simple formula. You need healthy animals; you need qualified people to train and care for them; and you need robust equine accounting software to keep the whole operation funded and organized. 

Any equine business is set for success with all three in place—but success becomes elusive or impossible with any missing piece. 

Many people who enter this industry have a deep equine background, so they know how to pick horses and trainers. For that same reason, however, they have less experience selecting accounting software. That might cause some to pick less-than-ideal solutions without realizing the mistake. 

Later, when business issues arise, the accounting software is the likely culprit. It causes more chaos and consequences than most realize, making it a potential problem to be worried about…and a possible solution to be excited about.  

Indicators You Have the Wrong Equine Accounting Software

  • Overwhelming Chart of Accounts: The scale becomes unmanageable yet keeps growing.
  • Lengthy Month-End Close: It takes hours of manual data manipulation every single month. 
  • Painful Multi-Entity Management: There’s no easy way to get everything in one place.
  • Insufficient Reporting Capabilities: Reporting takes too much time and reveals too little. 
  • Outdated Financial Metrics: Data is days or weeks old because updates are take too much time and effort.

Put Success in the Saddle with Sage Intacct

Whether it’s Microsoft Dynamics GP or QuickBooks, some of the biggest accounting solutions on the market are also the wrong choice for equine businesses. They make accounting more difficult than lean and agile operators want it to be. Despite the complexity, they don’t have the necessary features. 

Sage Intacct reverses that equation, making sophisticated accounting simple and streamlined for equine businesses of any breed. 

This cloud-native financial management platform brings all financial data and every accounting tool together on one platform that’s accessible anywhere—farm, office, racetrack—with Internet access.  Coordination, visibility, and efficiency all multiply with a cloud accounting such as Sage Intacct.

Business intelligence amplifies as well thanks to Sage Intacct’s dimensional chart of accounts, which makes data easier to input and extract from the general ledger. Accountants save massive amounts of time on routine accounting tasks that they can redirect towards reporting using Sage Intacct’s powerful and intuitive tools. So much data management gets replaced with financial analysis, forecasting, and planning instead. 

With the ability to collect, consolidate, and consider all financial activities in one place, Sage Intacct gives equine businesses what few have but all need: real-time insights into financial and operational performance. Dashboards track and update key metrics automatically to give business leaders at all levels the numbers they need to make informed decisions more likely to have the intended outcome. 

Sage Intacct doesn’t guarantee success—but it puts all the pieces in place (besides the horses and trainers).

Put another important piece in place by partnering with Dean Dorton: a Sage Intacct implementation provider with deep expertise in accounting and decades-long experience serving the equine industry In Kentucky and around the world. 

Make the transition to Sage Intacct as smooth and successful as possible. Contact us.

Article Dean Dorton

See updates for December 2024 here.

This article has been updated from the original version on September 17, 2024.

What is “Beneficial Ownership Information”? 

Beneficial Ownership Information (“BOI”) reporting is a federal law requirement that is estimated to impact more than 30 million businesses by December 31, 2024. In general, any entity, domestic or foreign, created by filing a document with a secretary of state (or equivalent state office) will be required to file a BOI report. Unlike many government requirements, BOI reporting targets small businesses.

If you are a small business owner, there is a significant likelihood that your business is subject to BOI reporting. BOI reports will not be filed with the IRS but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury. Penalties for willful noncompliance may result in criminal and civil penalties of $500 per day, up to $10,000, and up to two years of jail time.

Entities subject to BOI reporting requirements called “reporting companies,” must file reports identifying (1) the beneficial owners of the entity and, in some instances, (2) the individuals who have applied with specified governmental authorities to form the entity or register it to do business (“company applicants”).

What is a “reporting company?”

“Reporting companies” are companies required to file BOI reports. There are two types of reporting companies:

  • Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
  • Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

Reporting companies can include S corporations, disregarded entities, or certain legal entities formed and registered with a Tribal office or similar agency under Tribal law.

Does a reporting company include an entity that is not created by the filing of a document with the secretary of state or similar office?

No, an entity must file a document with the secretary of state or a similar office to be considered a reporting company. Examples could include certain domestic corporations, LLCs, or Homeowners Associations.

Who is a beneficial owner?

A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company or (2) owns or controls at least 25% of the reporting company’s ownership interests. Beneficial owners may own or control a reporting company through trusts or through a trust arrangement with a corporate trustee. For more information on beneficial owners, including the meaning of “substantial control” and “ownership interest,” we recommend reviewing the Frequently Asked Questions (“FAQs”) posted by FinCEN.

Who is a company applicant?

As an initial matter, only reporting companies created or registered on or after January 1, 2024, will need to report their company applicants. Up to two individuals could qualify as a company applicant: (1) the individual who directly files the document that creates or registers the company, and (2) if more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing. Often, company applicants will be lawyers, law firms, or entity formation companies.

What type of information must be reported?

A reporting company will be required to report the following information about its beneficial owners and company applicants: the individual’s name, date of birth, address, and an identifying number from an acceptable identification document, such as a passport or U.S. driver’s license, as well as the name of the issuing state or jurisdiction. A copy of the identification document must also be provided.

Generally, BOI reports also must include the reporting company’s legal name, any trade names, the current street address of its principal place of business, its jurisdiction of formation or registration, and its tax identification number.

When do I have to report this information?

The deadlines for filing BOI reports depend on when the reporting company was created. The following chart illustrates the filing deadlines.

Creation or Registration Date of Company Filing Deadline
On or after January 1, 2024, but before January 1, 2025 Within 90 days of creation or registration
Before January 1, 2024 No later than January 1, 2025
On or after January 1, 2025 Within 30 days of creation or registration

What if there is a change in the information reported?

If there is any change to the information reported about the company or its beneficial owners, an updated report must be filed no later than 30 days after the date of the change. Likewise, if a BOI report is inaccurate, the company must correct it no later than 30 days after it becomes aware of the inaccuracy or has reason to know about it.

Is there an annual requirement to file a BOI report?

No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and corrected or updated BOI reports as needed.

How will I file my BOI report?

BOI reports are filed electronically through this secure filing system on FinCEN’s website.

Does every company have to file, or are there exemptions?

There are 23 types of entities that are exempt from BOI reporting. Exempt entities include publicly traded companies meeting certain requirements, many nonprofits, and entities that qualify as a “large operating company.” Generally, a large operating company is an entity that employs more than 20 full-time employees in the U.S., has an operating presence at a physical office in the U.S., and filed a federal income tax or information return in the U.S. for the previous year showing more than $5,000,000 in gross receipts or sales. More information on exemptions is available in FinCEN’s FAQs.

What are the criteria for the subsidiary exemption from the beneficial ownership information reporting requirement?

The entity’s ownership interests must be controlled or wholly owned, directly or indirectly, by certain exempt entities, such as governmental authorities, banks, credit unions, brokers or dealers in securities, insurance companies, accounting firms, public utilities, tax-exempt entities, or large operating companies. FinCEN’s FAQs provide more information on exemptions.

Who will have access to the BOI reports filed with FinCEN?

Federal, state, local, and Tribe officials and certain foreign officials who submit requests through a U.S. government agency will be permitted to obtain BOI for authorized national security, intelligence, and law enforcement activities. Financial institutions may also access BOI in certain circumstances. BOI reported to FinCEN will be stored in a secure, non-public database.

Where can I get more information?

In addition to its FAQs, FinCEN has issued a “Small Entity Compliance Guide.” The compliance guide, other resources, and reference materials are available on FinCEN’s website. Also, FinCEN has stated it will continue to provide guidance, information, and updates related to the BOI reporting requirements. Subscribe here to receive updates via email from FinCEN.

You have sole responsibility for your compliance with the CTA, including its BOI reporting requirements and the collection of relevant ownership and other information. Consider consulting with legal counsel if you have questions regarding the applicability of the CTA’s reporting requirements or the collection of relevant information.