by Caridad Muñiz-Padilla, Esq. and Arnaldo Laboy-Castro
Commencing on January 1st, 2024, corporations and limited liability companies (“LLCs”) organized in any State of the United States (“US”), as well as foreign corporations and LLCs authorized to do business in the US, must file a beneficial ownership information (“BOI”) report with the Financial Crimes Enforcement Network, a bureau of the US Department of the Treasury (“FinCen”), as required by the Corporate Transparency Act. It should be noted that Puerto Rico (“PR”) is considered a State of the US for these purposes. Thus, most PR organized corporations and LLCs, as well as non-PR organized entities authorized to do business in PR, must comply with this reporting requirement.
The reporting company must provide information about itself, such as its legal name, any trade name, address, jurisdiction of formation or registration, and taxpayer identification number. It must also provide information of its “beneficial owners”, such as their full legal name, date of birth, residential address, and an identifying number from an acceptable identification document, including without limitation a non-expired passport or driver’s license. A “beneficial owner” is an individual who, directly or indirectly, either (i) exercises substantial control over a reporting company, or (ii) owns or controls at least 25% of the ownership interests of a reporting company.
The due date for filing this BOI report varies depending on the date of formation or registration of the reporting company, as specified below:
– A reporting company created or registered before January 1st, 2024, will have from January 1st, 2024 through January 1st, 2025 to file its initial report.
– A reporting company created or registered on or after January 1st, 2024, will have 30 days after its organization or registration to file its initial report.
– If there is any change to the required information, the reporting company must file an updated report no later than 30 days after the date of change.
– If there is any inaccuracy in the required information, the reporting company must correct it no later than 30 days after it became aware of the inaccuracy or had reason to know of it.
The BOI report must be filed electronically through FinCen’s website. Non-compliance with this reporting requirement could result in the imposition of civil penalties of $500 per day (up to $10,000) or criminal penalties of up to two years in prison. Please note that there are 23 types of entities that are exempt from this new reporting requirement.
FinCen is proposing an extension of 90 days to the 30-day reporting period rule for newly formed entities only during the first year of implementation (i.e., January 1st, 2024 through December 31st, 2024). This extension would not apply to a reporting company created or registered before January 1st, 2024. After January 1st, 2025, all reporting companies must file their BOI report within the respective 30-day periods.
