Beneficial Ownership Information (BOI) Reporting
- As of January 1, 2024, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) began accepting Beneficial Ownership Information (BOI) reports as required by the Corporate Transparency Act (CTA) enacted in 2021. The CTA is NOT part of the tax code. Instead, it is a part of the Bank Secrecy Act and designed to uncover the ultimate owners, controllers, or beneficiaries of legal entities, aiming to prevent illicit financial activities, money laundering, and corruption.
- “Beneficial ownership” refers to the individuals who directly or indirectly own, control, or benefit from a legal entity such as a company. These individuals may not be the same as the legal owners or registered shareholders but have a significant interest or influence over the entity's operations.
- Who must file a BOI Report and are there any exemptions?
- Domestic corporations, LLC and any other entity created by filing a document with a secretary of state or similar office under the law of a State or Indian tribe, may be subject to the CTA reporting requirement.
- 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 registered to do business in any US State or Tribal jurisdiction by filing a document with a secretary of state or similar office of the state or tribe may be required to report under the CTA.
- There are 23 specific types of entities that are exempt from reporting requirements. One such exemption is for certain “large operating entities.” To qualify as a large entity, an entity must have the following criteria:
- Employs more than 20 full-time employees in the US.
- Must have a physical presence in US.
- Reported gross revenue of over $5M on its income tax return.
- To find out the additional exemptions please go to the BOI Small Entity Compliance Guide.
- When and what is needed to file the BOI Report?
- Companies that are required to comply (“reporting companies”) must file their initial reports by the following deadlines:
- Existing companies: Reporting companies created or registered to do business in the U.S. before January 1, 2024, must file by January 1, 2025.
- Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.
- New Companies: created after December 31, 2024, have 30 days to file after receiving actual or public notice that their company’s creation or registration is effective.
- Changes to entity ownership: must be reported within 30 days of the change.
- Generally, reporting companies must provide four pieces of information about each beneficial owner:
- Name
- Date of birth
- Address
- The identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted. The company must also submit certain information about itself, such as its name(s) and address. In addition, reporting companies created on or after January 1, 2024, are required to submit information about the individuals who formed the company (“company applicants”).
- How do I File a BOI Report?
- Filers must report the BOI electronically at www.fincen.gov/boi. They can also view informational videos and webinars, find answers to frequently asked questions, connect to the contact center, and learn more about how to report on the same website.
- For companies who fail to comply with BOI requirement, it can result in civil penalties of $500 per day for each day the report is not submitted up to $10,0000, and imprisonment for up to two years.
- Because of the potential legal implications of the filing, we recommend consultation with your attorney if you have questions or need assistance.