Beneficial Ownership Information and Your BOI Filing

IMPORTANT UPDATE: On March 1, 2024, the Corporate Transparency Act was ruled unconstitutional as a result of a lawsuit filed by the National Small Business Association. While BOI reporting requirements might be struck down for everyone in the near future, at this time the case only applies to the plaintiff. James Moore is closely tracking this news as this lawsuit continues to play out in federal court and will keep you informed on any significant updates.

2024 brings a new reporting requirement for beneficial ownership information (BOI) for some companies. Are you prepared? And do you know the signs when someone is using this requirement to defraud you? Learn more about the BOI filing, what it means for you and how to protect your business.

What is the new filing?

The BOI filing is a report filed with a division of the Department of Treasury called FinCEN (Financial Crimes Enforcement Network) and details certain information about corporations and LLCs. This report is a new requirement of the Corporate Transparency Act, which was passed in 2021 to boost transparency regarding company ownership and entity structure.

What is beneficial ownership information, and why is it important?

BOI is data identifying the individuals who ultimately own, control or benefit from a company or trust. They do not have to be the legal owners. Beneficial ownership information is crucial to law enforcement and national security in the fight against organized crime and terrorism. This data guides investigators as they probe illegal activities like money laundering and tax fraud.

Who will have access to the information?

FinCEN will permit federal, state, local and tribal officials—as well as certain foreign officials who submit a request through a U.S. federal government agency—to obtain BOI for authorized activities related to national security, intelligence and law enforcement.

Financial institutions will also have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the financial institutions.

Who needs to file? Are there any exceptions?

Any corporation (S or C) or LLC that has filed a document with a secretary of state to create their company must submit a BOI filing. Sole proprietors and general partnerships generally won’t need to file unless they have filed formation documents with a state agency. Foreign corporations may also need to file if they have registered to do business with any US state.

However, there are several exceptions. The full list can be found on the FinCEN FAQs, but here are the most common entities exempt from the BOI filing requirement:

1. Large operating company (more than 20 full-time employees, more than $5 million in gross receipts, and an operating presence at a physical office in the U.S.)
2. Certain types of inactive entities that were in existence on or before Jan. 1, 2020
3. Publicly traded companies
4. Financial institutions
5. Insurance companies
6. Public accounting firms
7. Tax-exempt organizations
8. Regulated public utilities

When is the BOI filing due?

For existing businesses, this report is due between Jan. 1, 2024, and Jan. 1, 2025. Companies formed between Jan. 1, 2024, and Jan. 1, 2025, are required to submit their BOI filing within 90 days of formation. Companies formed after Jan 1. 2025 will need to file the report within 30 days of formation.

What information is needed?

The BOI filing will provide FinCEN with the following facts about your company:

• Its legal name and any DBA names under which it conducts business
• Address
• Jurisdiction of formation
• Taxpayer identification number

You will also have to provide FinCEN with personally identifiable information (information from which an individual can be identified) for each beneficial owner.  A beneficial owner is defined as any individual who, directly or indirectly, exercises substantial control over a reporting company or who owns or controls at least 25% of a reporting company.

If an individual falls into any of the following four categories, they are defined as exercising substantial control:

• The individual is a senior officer (the company’s president, chief financial officer, general counsel, chief executive office, chief operating officer, or any other officer who performs a similar function).
• The individual has authority to appoint or remove certain officers or a majority of directors (or similar body) of the reporting company.
• The individual is an important decision-maker for the reporting company.
• The individual has any other form of substantial control over the reporting company as explained further in FinCEN’s Small Entity Compliance Guide

For each beneficial owner of your company, you’ll have to provide the individual’s legal name, birthdate, home address, an identifying number from a driver’s license, state ID, or passport, and an image of the document that the number is from. Reporting companies formed on or after Jan. 1, 2024, will also provide information about their company applicants.

Where do I file?

You must submit the BOI filing electronically through the FinCEN website.

What if I need help?

While a business tax expert can help answer some questions, we generally recommend that you consult an attorney.

What if I need to make a change?

Changes in reported information about the company or its beneficial owners changes require an updated BOI filing. This report must be filed with FinCEN within 30 days of the change.

If there was an inaccurate statement in the BOI filing for your company, a corrected report must be filed within 30 days of when you became aware of (or should have become aware of) the inaccuracy.

Is this an annual filing or one time?

This is a one-time filing unless your company has changes to the information filed on the report.

What’s this about fraud?

Scammers are using the BOI filing requirement for fraudulent purposes. They often send an official-looking email claiming to be from the government and offering to file your BOI directly with FinCEN — for a fee. Sometimes they request sensitive information about your business. They might also include a hyperlink or QR code to (supposedly) get the filing process started.

These emails are scams; do not respond to them or use any links or QR codes they contain. FinCEN has issued an alert on its BOI resource page with more information on how to spot fraudulent emails related to BOI filings.

Where can I find more information?

FinCEN has released a comprehensive small entity compliance guide with checklists to help companies determine the information needed to file. The aforementioned FAQ it released is also a great resource.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.