The Corporate Transparency Act (CTA), which was enacted by Congress in 2021 as part of the Anti-Money Laundering Act of 2020, will establish a national database of Beneficial Ownership Information (BOI) to crack down on financial crimes such as money laundering, terrorist financing, or concealment of assets in the US through shell companies. Starting January 1, 2024, the majority of US small businesses, including any existing, amended, or new corporation, Limited Liability Company, will be subject to new reporting requirements under the CTA and must submit beneficial ownership information with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) on their portal.

The act’s impact is sweeping and will affect nearly every US small business. Compliance will require reporting from any individual who is a “beneficial owner” (anyone having at least 25% ownership or control of the entity) or has “substantial control” of a company. There are many ways by which someone may fall into the category of beneficial owner and, therefore, be required to report. To prepare, companies should begin developing procedures to identify beneficial owners and track any changes in ownership to ensure compliance with reporting requirements.

Who is Required to File BOI Report?

Under the new reporting requirements, any domestic or foreign entity filing with a secretary of state must submit a beneficial ownership report in the FinCEN portal. This includes any corporation, limited liability company (LLC), or any entity created by the filing of a document with a secretary of state.

To comply with new requirements, reporting companies will need to identify themselves and anyone who is considered a”beneficial owner” (those having at least 25% ownership or control of the entity) or has substantial control of a company. Those with substantial control include, but may not be limited to:

  • Senior officers
  • Anyone with authority to appoint or remove any senior officers or a majority of the board of directors
  • Any individual with influence on important decisions made by the reporting company
  • Anyone with any form of substantial control over the reporting company, for example, a trustee of a trust

Once a reporting company has identified its beneficial owners, they must report the following information about each: name, birthdate, address, and a unique identifying number and issuing jurisdiction from an acceptable identification document (such as a state-issued ID or passport) along with an image of the document.

Timing of New Reporting Requirements

The rule will go into force on January 1, 2024. Under FinCEN’s recently proposed amendment to the reporting rule, companies founded or registered after January 1, 2024 will have 90 days after obtaining notice of their creation or registration to file their initial reports. Companies created or registered before January 1, 2024, will have one year (until January 1, 2025) to do so. After their initial filing, companies will have 30 days to report any changes to the information and must correct inaccurate information in previously filed reports within 30 days if they become aware of any inaccurate information in previous filings.

Reports will be submitted in FinCEN’s forthcoming portal, and there will be a fee of approximately $85 to submit an initial BOI report.

Penalties for Violating Reporting Requirements

Companies failing to report required or found to be providing false beneficial ownership information will be subject to harsh penalties, including civil penalties of up to $500 per day that a violation continues, fines of up to $10,000, and imprisonment for a period of up to two years.

To avoid these consequences, companies should prepare proactively by determining who qualifies for these disclosures and compiling information now. This process may be lengthy and complex. Please reach out to your advisors at Bowman & Company for more information or with any questions about how the CTA may affect you and your organization.


The Internal Revenue Service (IRS) has announced a moratorium on new claims related to the pandemic-era Employee Retention Credit (ERC, also known as Employee Retention Tax Credit).  The pause on new claims goes into effect immediately and will last until at least 2024.  

When claimed properly, the ERC is a refundable tax credit designed to help employers who continued to pay their employees while their businesses were fully or partially suspended during the COVID-19 pandemic.  

The move was prompted by growing concerns over fraud and abuse in the program resulting from scammers aggressively marketing the credit to honest small businesses. Currently, there are hundreds of criminal cases being investigated, with thousands more claims waiting to be audited.  

What Is Next for Your ERC Claim?  

Previously submitted claims will still be reviewed and paid out, however, at a much slower rate. Expected processing times will double from 90 days to 180 days, with the potential for an even longer timeline if the IRS must request additional documentation to substantiate the claim.  

If you have submitted or received an ERC claim, here is what you should do next:  

  • If you have previously submitted a claim, it will still be processed, but you should be prepared for much longer wait times and increased scrutiny.  
  • If you have a pending claim, you are strongly encouraged to review it with a trusted tax advisor to confirm its validity and withdraw any claims that are determined to have been submitted improperly to protect yourself against potential repercussions such as fees and interest.  
  • If you have previously received an ERC in error, there will be guidance forthcoming on how to repay improper claims. There is a settlement program being developed to help businesses who applied in good faith to avoid penalties. More information is expected to be forthcoming this fall.  

Protect Your Business Against Fraud 

In its release, the IRS emphasized its priority of protecting honest businesses and taxpayers from those seeking to take advantage.  

The IRS has also shared a list of warning signs that businesses should watch out for to protect themselves against aggressive marketers.  


Businesses are encouraged to review their claims now to avoid negative impacts, including fines and fees. IRS commissioner Danny Werfel advised seeking the guidance of reputable advisors, saying, “businesses should seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee.”  

The tax professionals at Bowman & Company have the knowledge to help protect your business, please reach out today with any questions related to your ERC claims.