In 2021 Congress enacted the Corporate Transparency Act, creating the Beneficial Ownership Information (BOI) reporting system. The reason behind this new reporting system is to prevent citizens from hiding and laundering illegal funds using shell companies hiding their identity.
Who will this new reporting requirement effect?
- Any corporation, limited liability company (LLC), or any other entity created by the filing of a document with a secretary of state or similar office.
- Common companies who are exempt from filing are tax-exempt entities and certain large companies.
- You can find a list of exempt companies in the Small Entity Compliance Guide linked below.
When are you required to file?
- Any company who was created and registered to do business prior to January 1, 2024, has until January 1 ,2025 to file.
- Companies created between January 1, 2024, and January 1, 2025 will have 90 calendar days to file.
- Companies created after January 1, 2025, will have 30 calendar days to file.
The failure to file on time, or file false or misleading information is a $500 per day fine, along with possible criminal consequences.
Who is a beneficial owner?
- An individual who owns more than 25% interest in the reporting company or
- An individual who exercises substantial control over the reporting company
If you’re unsure about if someone is a beneficial owner it’s better to over report than possibly under report. There are some exceptions to the definition of a beneficial owner. A couple of the exceptions include a minor child (parents/guardian’s information is reported instead) and an employee who has substantial control due to their position.
Where do you need to file?
- You will file your BOI report using the BOI E-filing system. Found here: boiefiling.fincen.gov/
For more information about reporting requirements and exemptions, the Small Entity Compliance Guide can be found here:
A video released by the Financial Crimes Enforcement Network (FinCEN) providing an overview about BOI Reporting can be found here: