Have you forgotten about the Beneficial Ownership Information (BOI) Report established by the Corporate Transparency Act (CTA) of 2021? Owners of qualifying domestic entities, as well as those qualifying foreign entities conducting their business within the United States and/or its territories are required to electronically submit a report to the Financial Crimes Enforcement Network or FinCEN.
Generally speaking, the vast majority of business entities with fewer than 20 full time employees and less than $5 million in sales or gross receipts documented and reported on federal information forms or tax returns will be required to complete the BOI disclosure.
Qualifying business entities formed prior to January 1, 2024 have until January 1, 2025 to electronically submit their report to FinCEN.
Qualifying business entities formed or registered on or after January 1, 2024 and prior to January 1, 2025, have 90 days from receiving notice that “their company’s creation or registration is effective” to complete and file initial BOI reports. This applies to public notices by the office of any Secretary of State.
Entities formed after January 1, 2025 will have 30 calendar days from actual company creation or registration and/or receipt of public notice thereof to file an initial BOI report for each entity
The Failure to File a Beneficial Ownership Information (BOI) Report is Financially Steep
The failure to file a completed BOI report to FinCen, or any willful submission or attempt to provide false or fraudulent ownership information can and will result in civil and/or criminal penalties. including:
- Up to $500 for each day the “violation continues”
- Imprisonment for up to two years and/or
- A fine of up to $10,000
These penalties apply to the senior officers of any entity that fails to timely file an accurate BOI report.
Changes to Previously Filed BOI Reports or Correction of Inaccurate Information
Officers and executives of qualifying entities must ensure that changes, updates and corrections are made on a timely basis. If there is any change to the information provided on a BOI report, an updated BOI report must be submitted within 30 days of the change itself.
What types of informational changes may occur? Changes could include a new DBA (Doing Business As), a change in beneficial ownership or the death of a beneficial owner. New corporate officers (such as a change at CEO) or a substantive sale of a beneficial business interest in the entity will require an update. Any change in identification used to validate a beneficial owner (such as a new drivers license) or change of address or unique tax identifier of an owner. Generally speaking, any change to any information previously provided must be updated within 30 days of the associated change.
What If You Are Unsure If Your Entity Must File a BOI Report?
It is the responsibility of the “beneficial owner(s)” of an entity to understand the requirements under these provisions and to ensure compliance with all filing requirements.
The CTA specifically exempts many specific types of industries including governmental authorities, public utilities, insurance and banking companies, credit unions and savings and loans, registered accounting firms, venture capital or tax-exempt entity as well as any inactive entity. You may find the full list of exempted entities and large operating companies in FinCEN’s “Small Entity Compliance Guide.”
A good place to start is FinCEN’s own Beneficial Ownership Information / BOI Page
