Beware of Scams Related to the Corporate Transparency Act and Beneficial Ownership Information for Your Freelance Business

The federal Corporate Transparency Act (CTA), which was just introduced late last year and became effective January 1, 2024, requires all corporations, S-Corps, LLCs or any other entity created by paperwork filed with a Secretary of State office to file a report of their beneficial ownership information (BOI). This is a business filing that is not related to tax filings in any way and only some states have chosen to introduce their own version of the Act in addition to the federal one (New York State being one of them).

Most Freelance Businesses Must File Their Beneficial Ownership Information

Generally, a beneficial owner is an individual who either exercises substantial control or owns 25% or more of the reporting company.

New and existing LLCs and corporations will be required to provide Beneficial Ownership Information of the entity to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) - the Treasury Department’s financial intelligence unit.

When is the BOI Report Due?

The filing timeframe is determined by when your LLC or corporation was created or registered.

• Created prior to January 1, 2024, you must file your initial BOI report by January 1, 2025.
• Created during 2024, you must file your initial BOI report within 90 days. *
• Created after 2024, you must file your initial BOI report within 30 days.

Freelance Businesses Must File BOI or Face Penalties

The Reporting Rule under the federal CTA requires that you add your information to a federal database. This database will become a compilation of the information of the owners of the vast majority of small businesses and other organizations in the United States. The Reporting Rule is separate from tax return filings with draconian penalties for non-compliance. 

The Financial Crimes Enforcement Network (FinCEN) Warns of CTA Scams

The Financial Crimes Enforcement Network, (FinCEN), has learned of attempts to solicit information from businesses and individuals who may be subject to certain reporting requirements under the Corporate Transparency Act.

The following is a list of scams related to the Corporate Transparency Act and BOI filing to be aware of:

• Correspondence that requests payment. There is no fee to file Beneficial Ownership Information (BOI) directly with FinCEN, and FinCEN does not send correspondence requesting payment to file BOI. Do not send money in response to any mailing that claims to be from FinCEN or another government agency.
• Correspondence that asks the recipient to click on a link or to scan a QR code. Those emails or letters are fraudulent. Do not click any suspicious links or attachments, or scan any QR codes in emails, on websites, or in any unsolicited mailings.
• Correspondence that references a “Form 4022,” or an “Important Compliance Notice.” This correspondence is fraudulent. FinCEN does not have a Form 4022. Do not send BOI to anyone by completing these forms.
• Correspondence or other documents referencing a “US Business Regulations Department.” This correspondence is fraudulent; there is no government entity by this name.

FinCEN does not send unsolicited requests and does not seek personal or financial information from members of the public. FinCEN does not have the authority to freeze assets or block fund transfers. FinCEN does not have any offices outside of the United States.

For additional information, visit the Consumer Financial Protection Bureau website to find resources for detecting, preventing, and reporting fraud and scams.

Be Aware of Your State’s CTA and BOI Filing Requirements 

Another area that needs special attention is that of local CTA filing requirements. New York State, for example, is requiring these filings beginning January 1, 2026 (The earliest reporting date including entities formed on or after that date, and January 1, 2027, for entities formed or qualified prior to January 1, 2026.).

All New York State businesses (formed in New York State or doing business in it)  that are Limited Liability Companies must comply with the New York Limited Liability Corporate Transparency Act (NY LLCTA) and its Beneficial Ownership Information Reporting Rule (Reporting Rule). If you have multiple businesses you must file for each one. 

However, being one of just a few states that is enacting its own CTA at the moment, makes this state a potential model for other state governing bodies that may follow suit. Make sure you stay aware and ahead of these potential state-level CTA reporting requirements.

The deadline for the first wave of Beneficial Ownership Information reporting requirements is coming up quickly. If you are unsure of your freelance business’s reporting requirements, please reach out to an accounting professional for assistance.