As you may recall, beginning with 2024, many companies are required to file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN). FinCEN is a division of the U.S. Department of the Treasury. This legislation was enacted in 2021 under the Federal Corporate Transparency Act.
While the intention is to help reduce financial crimes such as money laundering and tax evasion, this new filing is a burdensome requirement imposed on mostly small business. Essentially, every business that is registered with the Secretary of State will need to make a filing unless it meets an exception (such as having 20 or more employees and $5 million in revenues for the prior year). The limited list of exceptions can be found on the FinCEN website. We wanted to stress the importance of making sure you take care of any reporting requirements as outlined on the FinCEN website as the penalties are steep if you do not comply.
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information, may result in a civil penalty of up to $591 for each day that the violation continues and/or criminal
penalties, including imprisonment, for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI Report may be held accountable for that failure.
Below is a summary of the provisions of the BOI rules. It is not intended to be relied upon for your filing and does not represent legal advice. We recommend that you contact your attorney regarding your filing requirements and visit the websites cited below for additional information. Please be sure to thoroughly research your situation and obtain legal counsel.
- Key filing deadlines:
- Entities formed before January 1, 2024, will have until January 1, 2025, to file their initial report.
- Entities formed during 2024 have 90 days to file their initial report after receiving actual or public notice that the company’s creation or registration is effective, whichever is earlier.
- Entities formed after December 31, 2024, will only have 30 days to file their initial report.
- The report is a one-time filing, but the filing needs to be updated within 90 days, or 30 days after 2024, for things like an address change, registering a new business name, change in ownership, change or addition of a beneficial owner, when a new driver’s license is obtained with a changed address, etc.
- A beneficial owner is anyone who exercises substantial control over the entity, such as corporate officers like the CEO or CFO, important decision makers, or individuals who own at least 25% of the entity. There is no penalty for over-reporting of beneficial owners.
Note that a “beneficial owner” does not need to be an owner at all, but just a senior employee in a management capacity.
In addition to the company information, beneficial owners are required to provide their personal home address and personal identification as part of the BOI submission. Your personal ID for this purpose is a copy of your passport or driver’s license. These documents are required to be uploaded to FinCEN for all persons who are required to submit for BOI purposes. In lieu of submitting your personal ID for each company you are associated with, many experts are recommending that people obtain a FinCEN Identifier. An individual who obtains a FinCEN Identifier can supply that number to the company in lieu of providing his personal identification, but then it becomes the obligation of the individual to update FinCEN if his identification changes.
We know this is burdensome to a business and the beneficial owners to keep up on and it will take vigilance to keep the reporting current.
Bowman & Company, LLP will not be filing these reports on behalf of our clients due to the strict requirements on information reporting. We are advising you of the importance of the matter and urge your prompt attention to it.
Below is a list of recommended sites for more information on Beneficial Ownership Information filing requirements and how to fill out your application if it is required:
- FinCEN BOI Website:
- Frequently Asked Questions:
- Location to file:
- Create a FinCEN ID (if desired):
- Small Entity Compliance Guide
If your organization is subject to this reporting, we encourage you to act promptly to avoid potential penalties. Should you have any questions or need further clarification, please reach out to your legal advisor to determine how the CTA impacts your specific situation.
We hope this reminder assists you in taking the necessary steps toward compliance.
Sincerely,
Bowman & Company, LLP