Corporate Transparency Act Penalties Explained
The Corporate Transparency Act (CTA) went into effect on January 1, 2024, requiring all reporting companies to submit beneficial owner information (BOI) to the Financial Crimes Enforcement Network (FinCEN).
BOI Reporting isn’t optional, and not submitting an accurate report timely can expose you to significant Corporate Transparency Act penalties. This guide explains the penalties you might face and provides actionable advice on preventing the violations.
We’ll also introduce Harbor Compliance and show you the value of having a reliable partner who can make BOI reporting effortless and risk-free.
CTA Violations and Penalties
According to the U.S. Code (31 U.S.C. 5336(h)(2)), there are two distinct BOI reporting violations:
- Willful provision or attempt to provide false or fraudulent BOI, documents, or photos
- Willful failure to provide a complete, updated BOI report
Both violations can result in civil or criminal penalties, which are outlined in the following table:
| Type | Penalty |
|---|---|
| Civil | No more than $500 per day of continued violation |
| Criminal | A fine of no more than $10,000, up to two years of imprisonment, or both |
The U.S. Code also prohibits any unauthorized use or disclosure of BOI. The civil penalty for this violation is the same, while the criminal is higher—up to five years of imprisonment and a fine of up to $250,000 (or both).
How To Prevent CTA Violations
If you want to avoid the aforementioned penalties, you must take two steps:
- Submit your initial BOI report within the prescribed timeframe
- Correct any mistakes and update your BOI regularly
When Do You Need To Submit the Initial BOI Report?
The timeframe for submitting your BOI report depends on when your company was formed. If the company was registered before January 1, 2024, you have until January 1, 2025, to file the report.
Companies formed between January 1, 2024, and January 1, 2025, must submit a BOI report within 90 days of receiving a notice that their registration has taken effect. The CTA differentiates between actual and public notices, and the following table explains both types:
| Notice Type | Explaination |
|---|---|
| Actual | Official correspondence from the secretary of state or similar authority received by the company |
| Public | Provided through a public registry managed by the secretary of state or equivalent regulatory body |
Depending on your jurisdiction, you might receive either or both of these notices. If you receive both, the 90-day period starts when the earlier notice is received.
If your organization is formed on or after January 1, 2025, you must submit your initial report within 30 days of receiving the notice. Any delay might be considered a violation and expose you to the aforementioned penalties.
Keep Your BOI Accurate and Updated
Sending the initial BOI report is only a part of the reporting process—and the easier one at that. A far more challenging task is ensuring the provided information is current and free of errors. Failure to do so is grounds for violation penalties, so many company owners might feel constant pressure and worry that their BOI report is outdated.
The main reason for this is that FinCEN must be updated on even the smallest changes to information of the company’s beneficial owners. For example, if a beneficial owner provided a government-issued photo ID as proof of identity and changed it afterward, the document is no longer considered valid.
In this case, you have 30 days to submit the updated BOI report before violating CTA regulations.
On the bright side, the CTA creates a safe harbor as per 31 U.S.C. 5336(h)(3)(C). If you notice any inaccuracies in your reported BOI and voluntarily submit an updated report within 90 days, you won’t be subject to penalties.
Still, the possibility of unrecognized mistakes or their consequences is enough to make most people uneasy. If you need help ensuring such mistakes don’t happen, you can rely on Harbor Compliance.
Enjoy Risk-Free BOI Reporting With Harbor Compliance
To help you enjoy peace of mind and focus on core business operations without worrying about CTA regulations, we offer a convenient and reliable BOI Reporting Service. It gives you a mostly hands-off approach to reporting since we take care of the entire filing process to free up your time.
When you partner with us, we’ll gather your BOI and submit it to FinCEN. More importantly, we’ll provide ongoing support to help you keep the report accurate and updated.
Our service is available to all reporting companies, most notably:
- Corporations and LLCs
- Nonprofits that aren’t 501(c) exempt
- Small businesses
- Multientity businesses
- Multinational companies
Benefits of Entrusting BOI Reporting to Harbor Compliance
The main reason you should engage with us is extensive know-how and expertise. Harbor Compliance is one of the nation’s leading providers of compliance solutions, and we can help your organization run without regulatory setbacks, regardless of its ownership and leadership structure.
After filing your initial BOI report, we’ll send you regular reminders to check whether any information needs to be updated. This means you don’t need to wonder if anything has slipped through the cracks and might be considered a violation of the CTA.
You can also keep track of your company’s ownership information through the optional Records Manager add-on. With all data laid out clearly in a centralized system, you won’t have to scour lots of documents or spreadsheets to find BOI.
Harbor Compliance also takes care of any report corrections that might be necessary. If you notice that any of the provided information is inaccurate, we’ll help you resolve this issue within the required timeframe and avoid penalties. You can use our BOI Reporting Service for up to four initial, corrected, and/or updated reports per year.
How To Order Our BOI Reporting Service
You can get started with our BOI Reporting Service in a few quick steps:
- Go to the signup wizard
- Choose from three options suitable for different reporting needs:
- Single business
- Nonprofit that is not 501(c) exempt
- Multiple entities
- Fill out the form by entering your contact and company details
- Check out
When you order the service, we’ll collect your BOI and submit the initial report to FinCEN on your behalf. If there’s a change in your beneficial ownership structure or any relevant information, notify us, and we’ll report it to FinCEN accurately and timely.
Explore Our Additional Solutions
Effective BOI reporting is only one aspect of ensuring your organization runs in accordance with state and federal laws. You must check numerous other boxes, which can be overwhelming and prevent you from focusing your attention on impactful work.
If you need help meeting your obligations, you can explore our rich service portfolio. We offer solutions for virtually all the key regulatory requirements, so we can contribute to your organization’s uninterrupted operations.
Whenever you need to file something with the secretary of state or a similar authority, you can use our Drop-Off Filing Service. It lets us hand out your documents in person, which gives them priority and expedites the filing process. We can also obtain important documents in your name, including:
Harbor Compliance provides comprehensive support throughout your organization’s lifecycle. You can take advantage of various services, such as:
We can also serve as your organization’s registered agent to efficiently receive and forward your legal or government notices. You can use our services even if you already have an agent because we can help you switch to another one.
Other notable services include the following:
- General business licenses and industry-specific ones (construction, engineering, etc.)
- Tax-related services (e.g., obtaining an EIN, payroll tax registration, and sales and use tax registration)
- Nonprofit incorporation or charitable registration alongside a 501(c) tax exemption
BOI Reporting FAQs
Below, you’ll see some of the most commonly asked questions about BOI reporting. If you need additional guidance, you can explore our robust Information Center alongside FinCEN’s FAQ page.
A BOI report is a document submitted to FinCEN that contains identifying information about the reporting company’s beneficial owners. It also includes information on company applicants in case a company was formed on or after January 1, 2024.
The Corporate Transparency Act affects corporations, LLCs, and other legal entities formed through the filing of appropriate documents with the secretary of state or similar regulatory body.
The CTA highlights 23 specific legal entity types that don’t need to report BOI. You can find the complete list alongside qualification criteria in FinCEN’s Small Entity Compliance Guide.
A beneficial owner is an individual who has substantial control over a reporting company or owns at least 25% of its ownership interests.
Your BOI report must include the following information on each beneficial owner:
- Full legal name
- Date of birth
- Complete current address
- Image, issuing jurisdiction, and unique number of a government-issued identification document
Prevent CTA Penalties With Harbor Compliance
If you want to minimize the risk of exposing yourself to CTA violations and penalties, order our BOI reporting service today. We’ll help you file the initial report and all the necessary updates or corrections timely and effortlessly.
To get a clear overview of how well your organization meets other regulatory requirements, get a free Harbor Compliance Score™. If there are any pending obligations you should meet promptly, reach out to us to inquire about the other services we offer.
You can also take advantage of our award-winning compliance platform that makes it easy to keep your organization aligned with important regulations. Schedule a demonstration to see it in action.
