FinCEN Beneficial Ownership Information Reporting (logo)

FinCEN Beneficial Ownership Information Reporting

posted in: FinCEN | 0

Mandatory FinCEN Beneficial Ownership Information Reporting

In 2021, Congress passed a statute called the Corporate Transparency Act(CTA). Under this statute, most companies that conduct business in the U.S. will be REQUIRED to report the beneficial ownership information (BOI) to the Financial Crimes Enforcement Network(FinCEN). A beneficial owner is considered any individual who:

  1. Has substantial influence over important decisions in a reporting company
  2. OR owns/controls at least 25 percent of the ownership interests in a reporting company

To give clarity to many people affected by these changes, FinCEN has provided numerous answers to general questions on the subject. Here is a summary of some important information derived from those FAQs.

FinCEN BIO Reporting Frequently Asked Questions

1. What entities are required to report BOI?

Corporations, limited liability companies, or any entity created by filing a document with a secretary of state are required to report BOI.

2. Where and how do I file BOI?

FinCEN is developing an electronic filing system. The system will become available on January 1, 2024, and will be accessible via FinCEN’s website.

3. When do I have to file BOI?

a. New entities (created/registered after 12/31/2023) must file within 30 days of their formation. (A rule has been proposed that would allow for entities created in 2024 to have 90 days as opposed to 30)

b. Existing entities (created/registered before 1/1/2024) must file by 1/1/2025

c. Companies required to report BOI that have changes to previously reported information or find inaccuracies in previously filed reports must file within 30 days.

4. Are there exemptions from filing BOI?

Twenty-three different categories of exemptions are allowed. These categories include tax-exempt entities, public accounting firms, securities brokers/dealers, publicly traded companies, banks and credit unions, and certain large operating entities. To qualify as a large operating entity, the company must employ more than 20 people in the U.S., report gross revenue of over $5 million on the prior year’s tax return, and be physically present in the U.S.

5. Why does the U.S. want BOI to be reported?

The intent of the BOI reporting requirement is to help U.S. law enforcement deter money laundering, the financing of terrorism, and other illegal activities.

6. What if I fail to file on time?

Willfully not complying with the BOI requirement can result in penalties ranging from $500 per day, up to $10,000, and imprisonment of up to two years.

More Information on BOI Reporting

For more information, contact us at 860-496-8119, or visit the FinCEN BOI Frequently Asked Questions web page.