BOI Deadline Approaching - What You Need To Know

Brian Davet |
Categories
Deadlines

Most of you have probably heard something about the Corporate Transparency Act, requiring the filing of the Beneficial Ownership Information with the government before December 31, 2024.  This is part of the Financial Crimes Enforcement Network (FinCEN) that mandates that most small business entities file a Beneficial Ownership Information (BOI) identifying the individuals who own or control the company. The new regulation affects a wide range of entities, including: 

  • Corporations
  • Limited liability companies (LLC) (including sole members)
  • S-Corporations
  • Limited liability partnerships (LLPs)
  • Other entities formed by filing documents with any U.S. State

There have been continuous updates explaining the new regulation requirements, as well as lawsuits and pending legislation to delay or change these requirements. There is currently a push to delay filing for one year.  It appears, however, that at this point, with a lame duck Congress, that the rules will go into effect as is with a filing deadline of December 31, 2024. Failure to file can result in substantial penalties of $500 per day for each day you are late, up to a maximum of $10,000 and imprisonment for up to two years. In the latest release from the FinCEN director on November 7, 2024, approximately 6.5 million businesses have completed their filing, with an estimated 23.5 million yet to be filed by the end of year. 

What is required?

The filing does not require any financial information relating to the company’s earnings or assets, but requires information to be provided on the beneficial owners of the company. 

How to file?

Information regarding the filing requirements can be found at https://fincen.gov/boi. Many of you will be able to file the reports on your own and can start the filing process at https://boiefiling.fincen.gov. There is no charge if you complete the filing on your own. To complete the form, you will need to list the name and address of your entity and provide the name, address and identification of each beneficial with 25% or more ownership interest or those that exercise substantial control. For each individual reported, you will need to scan in photo identification, such as a driver's license or passport with the application.

Who is a company applicant?

This could be you or your attorney who initially filed your application with the state.  NOTE: If you were organized before January 1, 2024, this does not apply and should be left blank.

Who is a beneficial owner?

  • One who owns or controls at least 25% of the company
  • One who can exercise substantial control over the company and /or major decisions, which can include officers, directors, managers, partners, and those individuals who make major decisions for the company.
  • One must be an individual. Partnerships, corporations, and trusts are not beneficial owners and will require looking through the entity to determine to beneficial owner.

Proof of Filing

We recommend the approach of printing out a PDF copy of the forms and keeping a copy for your records. After completing the filing, you should also print and retain the proof of filing provided at the end of the process.

Is this an annual filing?

No, you need to complete the initial filing and then, if there is any change in ownership or address of any of the beneficial owners previously reported, this will need to be updated within 30 days of that transaction, or you will again be subjected to penalties. If there are no changes during the year, then there is no additional filing requirement under the current regulations. You will be responsible for monitoring this, as there are no notices to remind you to file.

Are there any exceptions?

The regulations do provide exceptions for several entities which can be found at the FinCEN website. In particular, nonprofit organizations organized under 501(c) are exempt. Organizations which have more than $5 Million in average annual receipts and 20 or more full time employees are also exempt from filing. Both criteria must be met.  There are several other specific entities exempted, and they are listed on the website, but most others who do not meet those exceptions will not need to file. 

Although most of you will have the necessary information and may opt to file the reports on your own, if you have a more complicated situation, such as non-individual owners, and you need assistance, please let us know.  We will be glad to help or direct you to a third party providing those services. Although there could still be some delay or changes to the rules, we suggest that you go ahead and complete the filing as soon as possible, since the penalties are so severe for non-compliance.