What's New | Articles & Press Releases
Beneficial Ownership Information Reporting to Begin January 1, 2024
Starting January 1, 2024, certain entities will be required to file beneficial ownership information (“BOI”) reports with the Financial Crimes Enforcement Network (“FinCEN”), part of the U.S. Department of the Treasury. These reporting requirements emerged from the Corporate Transparency Act passed by Congress in 2021, an attempt by the government to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on entities doing business in the United States.
What companies are required to file a BOI report?
Two types of companies are required to file a BOI report:
1. Domestic reporting companies – corporations, LLCs, and any other entities created by the filing of a document with a secretary of state or similar office in the U.S.
2. Foreign reporting companies – entities (including. corporations and LLCs) formed under the law of a foreign country that have registered to do business in the U.S. by the filing of a document with a secretary of state or any similar office.
Are there any exemptions from the reporting requirements?
Twenty-three types of entities are exempt:
1. Securities reporting issuer
2. Governmental authority
3. Bank
4. Credit union
5. Depository institution holding company
6. Money services business
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity
21. Large operating company
22. Subsidiary of certain exempt entities
23. Inactive entity
When do I need to file my company’s report?
1/1/2024 – Date FinCEN will begin accepting beneficial ownership information reports
1/1/2025 – Deadline for reporting companies in existence prior to 1/1/2024 to file initial beneficial ownership information reports
Thirty calendar days - Deadline for reporting companies created or registered to do business on or after 1/1/2024 to file initial beneficial ownership information report; runs from the earlier of the time a company receives actual notice that its creation or registration is effective or after a secretary of state or similar office first provides public notice of the company’s creation or registration.
Is there a filing fee?
There is no fee for filing a BOI report.
What information must a company provide?
Reporting Company Information:
• Full legal name
• Any trade name or “doing business as” (DBA) name
• Complete current U.S. address (either the address of the principal place of business in United States, or, if the reporting company’s principal place of business is not in the United States, the primary location in the United States where the company conducts business)
• State, Tribal, or foreign jurisdiction of formation
• For a foreign reporting company only, State or Tribal jurisdiction of first registration
• Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) (including an Employer Identification Number (EIN); if a foreign reporting company has not been issued a TIN, report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction)
Beneficial Owner Information
A beneficial owner is any individual who meets at least one of two criteria: (1) exercising substantial control over the reporting company; or (2) owning or controlling at least 25 percent of the ownership interest of the reporting company.
Required Information for Each Beneficial Owner
• the individual's full legal name
• date of birth
• current residential or business street address
• a unique identifying number from an acceptable identification document (e.g., a passport)—or the individual's FinCEN identifier
Company Applicant
Each reporting company created on or after January 1, 2024 is required to identify at least one company applicant, and at most two, in its report. In the case of a domestic reporting company, a company applicant is the individual who directly files the document that forms the entity. In the case of a foreign reporting company, a company applicant is the individual who directly files the document that first registers the entity to do business in the United States. A second company applicant must be reported if more than one individual is involved in the filing, where the second company applicant is a person who directs or controls the filing of the document by the direct filer.
Required Information for Each Company Applicant
• the individual's full legal name
• date of birth
• current residential or business street address
• a unique identifying number from an acceptable identification document (e.g., a passport)—or the individual's FinCEN identifier
Are there any special reporting rules?
Yes, there are four special reporting rules that could affect a company’s reporting obligations:
1. Owned by exempt entity: A reporting company does not need to report information about any beneficial owner whose ownership interests in a reporting company are held through one or more entities, all of which are themselves exempt from the reporting company definition. Instead, a company may report the names of all of the exempt entities rather than information about the individual who is a beneficial owner of the reporting company through ownership interests in those exempt entities.
2. Minor child: A reporting company does not need to report information about a beneficial owner of the reporting company who is a minor child, provided the company has reported the required information about the minor child’s parent or legal guardian and indicated in the report that the information relates to a parent or legal guardian of a minor child.
3. Foreign pooled investment vehicle: A reporting company does not need to report information about each beneficial owner and company applicant if the company was formed under the laws of a foreign country and would be a reporting company if not for the pooled investment vehicle exemption. In this situation, the company must report one individual who exercises substantial control over the company. If more than one individual exercise substantial control over the company, the company must report information about the individual who has the greatest authority over the strategic management of the company. Under this special rule, the company does not need to report any company applicants.
4. Company applicant reporting for existing companies: If the reporting company was created or registered before January 1, 2024, the company does not need to report any company applicant information for the reporting company, but would specify on the BOI report that the company was created or registered before January 1, 2024.
When should a company report changes to its BOI report or correct any inaccuracies in a filed report?
Reporting companies have 30 calendar days to report changes to the company or beneficial ownership information in their previously filed reports and must correct inaccurate information in previously filed reports within 30 calendar days of when the reporting company becomes aware or has reason to know of the inaccuracy of information in earlier reports. There is no requirement to file an updated report for any changes to previously reported personal information about a company applicant; however, a corrective report must be filed for any inaccuracies in the information provided about the company applicant(s). Note that reporting companies have a safe harbor of 90 calendar days to correct an inaccurate report without incurring a penalty.
Are there penalties for failing to file a BOI report within the required timeframe?
Yes. The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information could result in civil and/or criminal penalties. Potential penalties include a civil penalty of up to $500 for each day that the violation continues, a maximum fine of up to $10,000, imprisonment for up to two years, and both a fine and imprisonment. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure. In addition, a person could be subject to civil and/or criminal penalties for willfully causing a company not to file a required BOI report or to report incomplete or false beneficial ownership information to FinCEN.
FinCEN will continue to publish additional proposed rulemaking and guidance as the process is finalized, so companies are encouraged to check FinCEN’s website at https://www.fincen.gov/boi for up-to-date information.
Sources:
1. As stated by FinCEN on 9/30/2022 in the Federal Register at https://www.federalregister.gov/documents/2022/09/30/2022-21020/beneficial-ownership-information-reporting-requirements
2. Other types of legal entities, including certain trusts, are excluded from the definitions to the extent that they are not created by the filing of a document with a secretary of state or similar office. See https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet
3. Refer to FinCEN’s Small Entity Compliance Guide for checklists that may help determine whether a company meets an exemption
4. FinCEN issued a Notice of Proposed Rulemaking on 9/28/2023 to extend the deadline to 90 days. The deadline to submit written comments on the proposed rulemaking is set to expire on 10/30/2023. Please refer to https://www.federalregister.gov/documents/2023/09/28/2023-21226/beneficial-ownership-information-reporting-deadline-extension-for-reporting-companies-created-or for additional information.
5. See Chapter 2 of the Small Entity Compliance Guide for a breakdown of what qualifies as “substantial control” and “ownership interest” as well as a list of 5 exceptions to the beneficial owner definition
6. Refer to Section 4.3 of the Small Entity Compliance Guide for guidance on FinCEN identifiers
7. Refer to Section 4.2 of the Small Entity Compliance Guide for examples
What companies are required to file a BOI report?
Two types of companies are required to file a BOI report:
1. Domestic reporting companies – corporations, LLCs, and any other entities created by the filing of a document with a secretary of state or similar office in the U.S.
2. Foreign reporting companies – entities (including. corporations and LLCs) formed under the law of a foreign country that have registered to do business in the U.S. by the filing of a document with a secretary of state or any similar office.
Are there any exemptions from the reporting requirements?
Twenty-three types of entities are exempt:
1. Securities reporting issuer
2. Governmental authority
3. Bank
4. Credit union
5. Depository institution holding company
6. Money services business
7. Broker or dealer in securities
8. Securities exchange or clearing agency
9. Other Exchange Act registered entity
10. Investment company or investment adviser
11. Venture capital fund adviser
12. Insurance company
13. State-licensed insurance producer
14. Commodity Exchange Act registered entity
15. Accounting firm
16. Public utility
17. Financial market utility
18. Pooled investment vehicle
19. Tax-exempt entity
20. Entity assisting a tax-exempt entity
21. Large operating company
22. Subsidiary of certain exempt entities
23. Inactive entity
When do I need to file my company’s report?
1/1/2024 – Date FinCEN will begin accepting beneficial ownership information reports
1/1/2025 – Deadline for reporting companies in existence prior to 1/1/2024 to file initial beneficial ownership information reports
Thirty calendar days - Deadline for reporting companies created or registered to do business on or after 1/1/2024 to file initial beneficial ownership information report; runs from the earlier of the time a company receives actual notice that its creation or registration is effective or after a secretary of state or similar office first provides public notice of the company’s creation or registration.
Is there a filing fee?
There is no fee for filing a BOI report.
What information must a company provide?
Reporting Company Information:
• Full legal name
• Any trade name or “doing business as” (DBA) name
• Complete current U.S. address (either the address of the principal place of business in United States, or, if the reporting company’s principal place of business is not in the United States, the primary location in the United States where the company conducts business)
• State, Tribal, or foreign jurisdiction of formation
• For a foreign reporting company only, State or Tribal jurisdiction of first registration
• Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) (including an Employer Identification Number (EIN); if a foreign reporting company has not been issued a TIN, report a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction)
Beneficial Owner Information
A beneficial owner is any individual who meets at least one of two criteria: (1) exercising substantial control over the reporting company; or (2) owning or controlling at least 25 percent of the ownership interest of the reporting company.
Required Information for Each Beneficial Owner
• the individual's full legal name
• date of birth
• current residential or business street address
• a unique identifying number from an acceptable identification document (e.g., a passport)—or the individual's FinCEN identifier
Company Applicant
Each reporting company created on or after January 1, 2024 is required to identify at least one company applicant, and at most two, in its report. In the case of a domestic reporting company, a company applicant is the individual who directly files the document that forms the entity. In the case of a foreign reporting company, a company applicant is the individual who directly files the document that first registers the entity to do business in the United States. A second company applicant must be reported if more than one individual is involved in the filing, where the second company applicant is a person who directs or controls the filing of the document by the direct filer.
Required Information for Each Company Applicant
• the individual's full legal name
• date of birth
• current residential or business street address
• a unique identifying number from an acceptable identification document (e.g., a passport)—or the individual's FinCEN identifier
Are there any special reporting rules?
Yes, there are four special reporting rules that could affect a company’s reporting obligations:
1. Owned by exempt entity: A reporting company does not need to report information about any beneficial owner whose ownership interests in a reporting company are held through one or more entities, all of which are themselves exempt from the reporting company definition. Instead, a company may report the names of all of the exempt entities rather than information about the individual who is a beneficial owner of the reporting company through ownership interests in those exempt entities.
2. Minor child: A reporting company does not need to report information about a beneficial owner of the reporting company who is a minor child, provided the company has reported the required information about the minor child’s parent or legal guardian and indicated in the report that the information relates to a parent or legal guardian of a minor child.
3. Foreign pooled investment vehicle: A reporting company does not need to report information about each beneficial owner and company applicant if the company was formed under the laws of a foreign country and would be a reporting company if not for the pooled investment vehicle exemption. In this situation, the company must report one individual who exercises substantial control over the company. If more than one individual exercise substantial control over the company, the company must report information about the individual who has the greatest authority over the strategic management of the company. Under this special rule, the company does not need to report any company applicants.
4. Company applicant reporting for existing companies: If the reporting company was created or registered before January 1, 2024, the company does not need to report any company applicant information for the reporting company, but would specify on the BOI report that the company was created or registered before January 1, 2024.
When should a company report changes to its BOI report or correct any inaccuracies in a filed report?
Reporting companies have 30 calendar days to report changes to the company or beneficial ownership information in their previously filed reports and must correct inaccurate information in previously filed reports within 30 calendar days of when the reporting company becomes aware or has reason to know of the inaccuracy of information in earlier reports. There is no requirement to file an updated report for any changes to previously reported personal information about a company applicant; however, a corrective report must be filed for any inaccuracies in the information provided about the company applicant(s). Note that reporting companies have a safe harbor of 90 calendar days to correct an inaccurate report without incurring a penalty.
Are there penalties for failing to file a BOI report within the required timeframe?
Yes. The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information could result in civil and/or criminal penalties. Potential penalties include a civil penalty of up to $500 for each day that the violation continues, a maximum fine of up to $10,000, imprisonment for up to two years, and both a fine and imprisonment. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure. In addition, a person could be subject to civil and/or criminal penalties for willfully causing a company not to file a required BOI report or to report incomplete or false beneficial ownership information to FinCEN.
FinCEN will continue to publish additional proposed rulemaking and guidance as the process is finalized, so companies are encouraged to check FinCEN’s website at https://www.fincen.gov/boi for up-to-date information.
Sources:
1. As stated by FinCEN on 9/30/2022 in the Federal Register at https://www.federalregister.gov/documents/2022/09/30/2022-21020/beneficial-ownership-information-reporting-requirements
2. Other types of legal entities, including certain trusts, are excluded from the definitions to the extent that they are not created by the filing of a document with a secretary of state or similar office. See https://www.fincen.gov/beneficial-ownership-information-reporting-rule-fact-sheet
3. Refer to FinCEN’s Small Entity Compliance Guide for checklists that may help determine whether a company meets an exemption
4. FinCEN issued a Notice of Proposed Rulemaking on 9/28/2023 to extend the deadline to 90 days. The deadline to submit written comments on the proposed rulemaking is set to expire on 10/30/2023. Please refer to https://www.federalregister.gov/documents/2023/09/28/2023-21226/beneficial-ownership-information-reporting-deadline-extension-for-reporting-companies-created-or for additional information.
5. See Chapter 2 of the Small Entity Compliance Guide for a breakdown of what qualifies as “substantial control” and “ownership interest” as well as a list of 5 exceptions to the beneficial owner definition
6. Refer to Section 4.3 of the Small Entity Compliance Guide for guidance on FinCEN identifiers
7. Refer to Section 4.2 of the Small Entity Compliance Guide for examples
