You may have recently heard that there is a new federal reporting requirement for businesses referred to as “BOI Reporting,”  and this may have left you wondering if it applies to your business and what deadlines you may need to meet.

In 2021, Congress enacted the bipartisan Corporate Transparency Act (“CTA”) to safeguard the financial system from illicit use, including money laundering and terrorism.

Effective January 1, 2024, the CTA requires many companies in the United States to report information about their beneficial ownership interest (“BOI”) to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of Treasury.

Who Must Report?

Companies may need to report information about its beneficial owners if it is: (1) a corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or an Indian tribe; or (2) a foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

Which Entities are Exempt from Reporting?

There are twenty-three (23) types of entities exempt from BOI reporting requirements, including publicly-traded companies, nonprofits, and certain large operating companies. For a full list of all 23 exempt entity types see FinCen’s FAQ page here.

What is considered beneficial ownership?

A “beneficial owner” is an individual who either directly or indirectly: (1) exercises “substantial control” over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests.

What kind of information does the BOI Reporting Require?

Information about the company, its beneficial owners, and its applicants including but not limited to: legal names, trade names, DBAs, principal place of business, jurisdiction of formation or registration, tax payer ID, TIN, individuals’ names, dates of birth, residential address, ID number from accepted forms of identification and an image of the same (e.g. driver’s license, passport).

What are the Initial Reporting Deadlines?

Each company’s initial reporting deadline depends on when it was created or registered:

• If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025 to report BOI.
• If your company is created or registered in 2024, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
• If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.

When will BOI Updates Need to be Reported to FinCen?

If there is any change or correction to the required information about your company or its beneficial owners in a BOI report that your company filed, your company must file an updated report no later than 30 days after the date of the change. The likely triggers for an updated BOI report include name changes, address changes, and certain business transactions.

Consequences for Noncompliance?

Under the CTA, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Both individuals and corporate entities can be held liable for willful violations.

CSD Guidance and Assistance with BOI Reporting.

For those clients who use CSD Attorneys at Law to assist with their state-required annual renewals, our office will be simultaneously offering to assist with the initial BOI Report to FinCen at the time of processing those companies’ annual renewals.

Corporate entities should contact their legal counsel if they are unsure whether the new BOI reporting requirements apply to their entity. Please contact Katherine Deets or Allison Beard at CSD Attorneys At Law if you would like assistance with determining whether BOI reporting applies to your business or determining who is a beneficial owner of the business.