Beneficial Ownership Information (BOI) Reporting Requirement

Starting January 1, 2024, a significant number of businesses will be required to comply with the Corporate Transparency Act (CTA). The CTA was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (otherwise known as “BOI”) of certain entities from people who own or control a company.

It is anticipated that 32.6 million businesses will be required to comply with this reporting requirement. The intent of the BOI reporting requirement is to help US law enforcement combat money laundering, the financing of terrorism and other illicit activity.

The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.

Below is some preliminary information for you to consider as you approach the implementation period for this new reporting requirement. This information is meant to be general-only and should not be applied to your specific facts and circumstances without consultation with competent legal counsel and/or other retained professional adviser.

What entities are required to comply with the CTA’s BOI reporting requirement?

Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.

Domestic entities that are not created by the filing of a document with a secretary of state or similar office are not required to report under the CTA.

Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.

Are there any exemptions from the filing requirements?

There are 23 categories of exemptions. Included in the exemptions list are publicly traded companies, banks and credit unions, securities brokers/dealers, public accounting firms, tax-exempt entities and certain inactive entities, among others. Please note these are not blanket exemptions and many of these entities are already heavily regulated by the government and thus already disclose their BOI to a government authority.

In addition, certain “large operating entities” are exempt from filing. To qualify for this exemption, the company must:

  1. Employ more than 20 people in the U.S.;
  2. Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and
  3. Be physically present in the U.S.

Who is a beneficial owner?

Any individual who, directly or indirectly, either:

  • Exercises “substantial control” over a reporting company, or
  • Owns or controls at least 25 percent of the ownership interests of a reporting company

An individual has substantial control of a reporting company if they direct, determine or exercise substantial influence over important decisions of the reporting company. This includes any senior officers of the reporting company, regardless of formal title or if they have no ownership interest in the reporting company.

The detailed CTA regulations define the terms “substantial control” and “ownership interest” further.

When must companies file?

There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.

  • New entities (created/registered in 2024) — must file within 90 days
  • New entities (created/registered after 12/31/2024) — must file within 30 days
  • Existing entities (created/registered before 1/1/24) — must file by 1/1/25
  • Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days

What sort of information is required to be reported?

Companies must report the following information: full name of the reporting company, any trade name or doing business as (DBA) name, business address, state or Tribal jurisdiction of formation, and an IRS taxpayer identification number (TIN).

Additionally, information on the beneficial owners of the entity and for newly created entities, the company applicants of the entity is required. This information includes — name, birthdate, address, and unique identifying number and issuing jurisdiction from an acceptable identification document (e.g., a driver’s license or passport) and an image of such document.

Risk of non-compliance

Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $500 per day and up to $10,000 with up to two years of jail time.

For more information or to file your report, please go to .

Phone System Update

The office phone lines have been restored! The office can accept incoming calls again.

Office phone lines temporarily unavailable

As of October 24, 2022 Smith & Associates phone lines are unavailable due to technical difficulties. Please email Monica Whitney at and we will reach out to you as soon as possible either by cell phone or email. We apologize for any inconvenience.

COVID Office Protocol Update

The office is open again! We are following the guidelines set by the Maine CDC and have relaxed our COVID protocols for coming into the office. Masks are no longer required to enter the office and we continue to sanitize common areas frequently. Please feel free to reach out to the office at anytime with any questions.

Winter Storm Office Closing

On January 29, 2022 Smith & Associates will be closed due to the impending Winter Storm, Monica will be available to reach until 12pm on Saturday via her email. monica@smithassociatescpa,com

Holiday Hours

As the holiday season quickly approaches we wanted to update everyone on the office hours for the remainder of 2021. On December 23rd we will be closing the office at 12pm and will be closed on December 24th in observance of Christmas. On December 30th we will be closing the office at 12pm and closed on December 31st in observance of New Year’s. We at Smith & Associates wish everyone a wonderful holiday season with family and friends.

The Office is Open!

The office is open to the public once more! We are asking that if you plan on coming into the office please call ahead when possible and we ask that masks be worn while in the office. When entering the office please use the side of the building entrance as the doors to the suite will remain locked to allow time for staff to mask appropriately and greet clients. We are trying to maintain social distancing for the safety and consideration of our staff and clients. We continue to encourage meetings via Zoom or phone, we are also offering in person meetings by appointment.

Also, a reminder for clients that have had an extension filed and still need to provide your tax information to Smith & Associates:

Personal (1040) information must be received by September 1, 2021.

Business Corporations (1120 & 1120S) information must be received by August 1, 2021.

Partnership (1065) information must be received by August 1, 2021.

Trusts (1041) information must be received by August 1, 2021.

We are extremely happy to be getting back on track with “normal” office protocol and we have appreciated everyone’s patience during this time! Please feel free to call the office (207) 846-8881 with any questions.

Tax Season Reminders

As tax season is already in full swing, we wanted to remind everyone of the COVID protocols for the office that are still in place from June 2020. We are strongly encouraging clients to utilize our secure client portals or the USPS to get their tax information to us. If you require any assistance with a client portal please contact our Administrative Manager Monica at 207-846-8881. The office remains closed to the public and we have limited times for drop off and pick up available. We require anyone that must drop off their materials to make an appointment ahead of time. Once here at the office please call and we will come and meet you outside, and you must be wearing a face mask. We are following the Maine CDC guidelines to maintain safety for our staff and our clients, we thank you for your patience.

COVID-19 Consolidated Appropriations Act

Passage of COVID-19 Relief Law PPP Loans & Other Key Provisions

On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA) was signed into law which included additional COVID-19 related relief.

Tax Deductibility for Paycheck Protection Program (PPP) Expenses

The CAA specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes disputed IRS guidance (Notice 2020-32 and Rev. Rul. 2020-27) that such expenses could not be deducted. The CAA clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan. The provision is effective as of the date of enactment of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The provision provides similar treatment for second draw PPP loans, effective for tax years ending after the date of enactment of the provision.

Restart of PPP Loans


New PPP loans will be available to first-time qualified borrowers and, for the first time, to businesses that previously received a PPP loan. Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they:

•             Have 300 or fewer employees

•             Have used or will use the full amount of their first PPP loan

•             Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019

Borrowers from the following groups are still eligible for the program even if they didn’t take out a loan in the first round:

•             Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans

•             Sole proprietors, independent contractors, and eligible self-employed individuals

•             Not-for-Profits, including churches

•             Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location

PPP Loan Terms

As with earlier PPP funding, the costs eligible for loan forgiveness in the new PPP funding include payroll, rent, covered mortgage interest, and utilities. The new PPP funding also makes the following potentially forgivable:

•             Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines

•             Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations

•             Covered operating costs such as software and cloud computing services and accounting needs

•             Covered property damage cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation

To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either 8 or 24 weeks — the same parameters earlier PPP funding had when it stopped accepting applications in August 2020. 

PPP Loan Forgiveness

The CAA creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower will receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The SBA must create the simplified application form within 24 days of the CAA’s enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud.

Additionally, the CAA repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.