Beneficial Ownership Information (BOI)

New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

The United States Congress recently enacted the Corporate Transparency Act (CTA), aiming to enhance corporate transparency and to combat financial crimes and money laundering. Beginning in 2024, the law requires small businesses in the United States to report information about beneficial owners – the individuals and entities who ultimately own or control the company – to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S Department of the Treasury.

The Beneficial Ownership Information (BOI) filing is simple, secure and free of charge. Unless a company needs to update or correct information, a report only needs to be submitted once. However, penalties for failing to file the report include felony conviction with up to two years prison time and a $500 fine per day of not filing. It is anticipated that 32.6 million businesses will be required to comply with this new reporting requirement.

Reporting is done with a special electronic filing with the Treasury Department’s Financial Crimes Enforcement Network. This is not a form that is filed with the IRS.

The following provides guidance on what you need to do in order to be in compliance with this new law. Once you have submitted your form to the government, please upload a copy of the FinCEN filing receipt to KBST&M here: https://www.kbstm.com/BOI-confirmation

Who Has to File a Report?

If your business is a corporation, a limited liability company (LLC), including a single-member LLC, you must fill out and submit the Beneficial Ownership Information (BOI) Reporting form by the end of 2024. If you start a new business in 2024, you must submit a BOI report within 90 days of formation.

The required information includes owners and, for new businesses formed in 2024 or later, the company applicants. To clarify, even if you have set up an LLC just to own a rental property, this BOI reporting form is required, and a separate filing and form is required for every single entity, whether an LLC, and S-corporation or a C-corporation.

When do I Report?

Initial Reporting:

  • Existing companies formed before 2024 must file a BOI report no later than January 1, 2025
  • New companies formed during 2024 must file a BOI report within 90 days of formation.
  • New companies formed after January 1, 2025, must file a BOI report within 30 days of formation

Annual Reporting: 

The initial BOI report filing does not expire, and you do not need to renew it annually. However, you have an ongoing duty to keep the BOI report up to date by reporting any changes to FinCen.

Updates:

Any updates or corrections to beneficial ownership information, including name and address changes, that you previously filed with FinCEN must be submitted within 30 days of said change. It will be your responsibility to make these updates as they occur.

Extensions:

At the present time, there are NO extensions available to file your company’s BOI Report.

Who is Exempt from Reporting?

There are twenty-three types of entities that are exempt from the beneficial ownership information reporting requirements. Most are for companies that are already subject to substantial federal or state regulation under which their beneficial ownership may already be known. This includes, among others, entities that file reports with the SEC, governmental authorities, banks, credit unions, money services businesses, investment advisors, securities brokers and dealers, tax exempt entities, insurance companies, state-licensed insurance producers, pooled-investment vehicles, public utilities, inactive entities, subsidiaries of certain exempt entities, SEC-registered accounting firms, and large operating companies.

The exemption for a “large operating company” is available to any entity that:

  1. Employs more than 20 full time employees in the U.S.
  2. Has an operating presence at a physical office within the U.S, and
  3. Has filed a federal income tax or information return in the U.S. for the previous year demonstrating more than $5 million in gross receipts or sales on the entity’s IRS Form 1120 or other applicable IRS form, excluding gross receipts or sales from sources outside the U.S.

The term “has an operating presence at a physical office within the U.S” means that an entity regularly conducts its business at a physical location in the U.S. that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity.

FinCEN’s Small Entity Compliance Guide (Chapter 1.2) includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption.

How do I Report?

Reporting companies report beneficial ownership information electronically through FinCEN’s website: www.fincen.gov/boi. Please file this form by the due dates listed above. The system provides a confirmation of receipt once a completed report is filed with FinCEN.

To fill out the secure online form, the following information is needed:

For the Company or Entity:

    1. Full legal name according to the Secretary of State (download a “good standing” report),
    2. Any trade and “doing business as” names,
    3. A complete current street address of the principal place of business (A P.O. Box or the address of a 3rd party agent does not comply with this requirement)
    4. The state, tribal or foreign jurisdiction of formation,
    5. The IRS Taxpayer Identification Number.

For the Owners and Applicants:

For each owner of at least 25% of the entity (directly or indirectly), the reporting must include for each owner:

  1. Legal name and date of birth,
  2. Address,
  3. Unique identifying number and the issuing jurisdiction from one of the following documents: (i) a non-expired passport issued to the individual by the United States government, (ii) or a non-expired identification document issued to the individual by a State, local government, or Indian tribe for the purpose of identifying the individual, (iii)or a non-expired driver’s license issued to the individual by a State, or (iv) a non-expired passport issued by a foreign government to the individual, if the individual does not possess any of the other documents described, and
  4. An image of the document from which the unique identifying number (above #4) was obtained. Additionally, the rule requires that reporting companies created after January 1, 2024, provide the four pieces of information and document image for company applicants.

Your attorney should be available to assist you with the filing of this form. Because of the incredible amount of confidential information that must be provided, we strongly emphasize that you do NOT use unknown 3rd party solicitors, which we expect to soon emerge, because they could use this confidential information to steal your or your company’s identity or data.

Once you have submitted your initial BOI report, please upload a copy of the FinCEN receipt to KBST&M here: https://www.kbstm.com/BOI-confirmation

Need More Information?

It is your responsibility to make sure the BOI Reporting form is filed with FinCEN by the due dates listed above. Please email or call your point of contact at KBST&M if you have any questions.

Additional information can be found on the FinCEN website (https://www.fincen.gov/boi) including FinCEN’s BOI FAQ webpage (https://www.fincen.gov/boi-faqs).