In recent years, the United States has intensified efforts to enhance corporate transparency and combat illicit financial activities. A pivotal development in this endeavor is the implementation of Beneficial Ownership Information (BOI) reporting requirements. These mandates compel certain business entities to disclose information about individuals who own or control them. This article delves into the BOI reporting obligations at both federal and state levels, with a particular focus on the two states I represent business clients, New York and Florida. This is a short summary of some of the key terms and issues, including: the types of companies required to file, exemptions, compliance deadlines, and the distinctions for New York and Florida companies.
Understanding BOI Reporting
Beneficial Ownership Information refers to data identifying individuals who directly or indirectly own or control a company. The primary objective of BOI reporting is to prevent the misuse of corporate structures for illicit activities such as money laundering, terrorism financing, and tax evasion. By mandating transparency, authorities aim to hold individuals accountable and safeguard the integrity of the financial system.
Federal BOI Reporting Requirements - Overview of the Corporate Transparency Act (CTA)
Enacted in 2021, the Corporate Transparency Act (CTA) is a federal law designed to enhance corporate transparency in the United States. The CTA requires certain business entities to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The reporting obligations under the CTA became effective on January 1, 2024.
Entities Required to File Under Federal Law
Under the CTA, the following entities are generally required to file BOI reports:
Corporations: Domestic corporations formed by filing with a secretary of state or similar office.
Limited Liability Companies (LLCs): Domestic LLCs created through a filing with a secretary of state or similar office.
Other Similar Entities: Any other entity created by filing with a secretary of state or similar office, including limited partnerships and business trusts.
Exemptions Under Federal Law
The CTA outlines 23 categories of entities exempt from BOI reporting, including:
Large Operating Companies: Entities with more than 20 full-time employees, over $5 million in gross receipts or sales, and an operating presence at a physical office within the United States.
Regulated Entities: Entities already subject to substantial federal or state regulation, such as banks, credit unions, and broker-dealers.
Other Specific Exemptions: Includes entities like tax-exempt organizations, inactive entities, and subsidiaries of certain exempt entities.
Entities falling under these exemptions are not required to file BOI reports with FinCEN.
BOI Reporting Requirements in New York - New York LLC Transparency Act (NYLTA)
On December 22, 2023, New York enacted the New York LLC Transparency Act (NYLTA), which mandates certain LLCs to disclose beneficial ownership information to the New York Department of State. The NYLTA is modeled after the federal CTA but includes specific provisions applicable to New York.
Entities Required to File in New York
Under the NYLTA, the following entities are required to file BOI reports:
Domestic LLCs: LLCs formed under New York law.
Foreign LLCs: LLCs formed under the laws of another jurisdiction but authorized to do business in New York.
These entities must file a BOI disclosure statement with the New York Department of State, providing information about their beneficial owners. The effective date of the NY law is January 1, 2026.
Exemptions Under New York Law
The NYLTA incorporates the 23 exemptions outlined in the federal CTA. Therefore, entities exempt under federal law are also exempt under New York law. However, the NYLTA requires exempt entities to file a Statement of Exemption with the New York Department of State, indicating the specific exemption claimed and the facts supporting it.
BOI Reporting Requirements in Florida
Florida's Adoption of Federal BOI Requirements
Florida has aligned its BOI reporting requirements with the federal CTA. The state does not have additional BOI reporting obligations beyond those mandated by federal law.
Entities required to file BOI reports in Florida include:
Corporations: Domestic corporations formed by filing with the Florida Department of State.
Limited Liability Companies (LLCs): Domestic LLCs created through a filing with the Florida Department of State.
Other Similar Entities: Any other entity created by filing with the Florida Department of State, including limited partnerships and business trusts.
These entities must comply with federal BOI reporting requirements as administered by FinCEN.
Exemptions Under Florida Law
Florida follows the federal exemptions outlined in the CTA. Entities exempt under federal law are also exempt in Florida. There are no additional state-specific exemptions or reporting requirements.
Key Differences Between New York and Florida BOI Requirements
While both New York and Florida adhere to federal BOI reporting requirements, notable differences include:
State-Specific Filing Procedures: New York requires certain LLCs to file BOI reports with the New York Department of State, in addition to federal filings. Florida does not have additional state-level BOI reporting requirements.
Additional State-Level Requirements: New York mandates exempt entities to file a Statement of Exemption, whereas Florida does not impose such a requirement.
Compliance Deadlines
Federal BOI Reporting
Existing Entities: Entities created or registered before January 1, 2024, must file their initial BOI reports by January 1, 2025.
New Entities: Entities created or registered on or after January 1, 2024, have 90 calendar days from the date of creation or registration to file their initial BOI
New York BOI Reporting
Existing Entities: NY LLCs formed or authorized to do business in NY before January 1, 2026 must file their initial BOI report or attestation of exemption, as applicable, by January 1, 2027
New Entities: NY LLCs formed or authorized to do business in NY on or after January 1, 2026 must file a BOI report or attestation of exemption, as applicable, within 30 days of an initial filing of articles of organization or an application for authority.
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