New in 2024: a federal reporting requirement for new and existing companies created or registered in any US State or Indian Tribe. For companies formed or registered before 2024, an Initial Beneficial Ownership Interest Report (BOIR or BOI Report) must be filed with with the US Treasury’s Financial Crimes Enforcement Network (FinCEN) by the end of 2024. For all newly formed or registered companies, a BOI Initial Report must be filed within 90 days of their formation or registration. The BOI Report requires information about the incorporators, the company, all owners controlling or owning 25% of the entity, and all decision makers (officers, c-suite executives, directors, managers).
What is the FinCEN BOI Report?
Congress passed the Corporate Transparency Act (CTA) in 2021, which established a new requirement that entities report beneficial ownership information to the US Treasury’s Financial Crimes Enforcement Network (FinCEN).
The reporting requirement aims to help the US Government make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
BOI Reports are e-filed directly on the FinCEN website, and there is no filing fee (https://boiefiling.fincen.gov/fileboir).
What Entities Must File a BOI Report?
Any company formed or registered (including foreign entities) in a state/tribal jurisdiction may need to file a BOI Report, especially if they do not otherwise have a reason to be registered with a federal agency. Companies include corporations, limited liability companies (LLCs), and other entitites. Because there are many exemptions, we encourage all companies to consult legal counsel for guidance.
When to File?
In 2024, an BOI Initial Report must be filed within 90 days of creating or registering new a new company.
After 2024, an BOI Initial Report must be filed within 90 days of creating or registering a new company.
For existing entities, the BOI Initial Report must be filed by January 1, 2025.
When needed, Corrected BOI Reports must be filed within 30 calendar days of discovering an error in a previous report.
On an ongoing basis, Updated BOI Reports must be filed within 30 days of a change to any information regarding the reporting company or its beneficial owners. Changes requiring an Updated Report include name changes, address changes for owners and companies, ownership updates, and changes to exemption status.
Who needs to provide information for the BOI Report?
For newly formed companies, the Company Applicants and Beneficial Owners must be identified. For existing companies, the Beneficial Owners must be identified.
Company Applicants:
Company Applicants include the individual who directly files the document that creates or registers the company in a state or tribal jurisdiction and the person who is primarily responsible for directing or controlling the filing.
Beneficial Owners (including individuals with control through a trust or similar arrangement):
Beneficial Owners include anyone with substantial control of the company, such as senior officers (President, CEO, CFO, COO, or GC), those with power to appoint or remove any senior officer or a majority of the board, and anyone with the ability to direct important decisions for the reporting company. Beneficial Owners also include anyone with an ownership interest of 25% or more.
Are there any penalities for failure to comply?
Yes: the willful failure to report complete or updated information in a BOI Report, or the willful provision of, or attempt to provide, false or fraudulent information in a BOI Report, may result in civil penalties and/or criminal penalties. Note that senior officers of an entity that fails to file a required BOI Report may be held accountable for that failure.
POTENTIAL PENALTIES:
Civil penalties of up to USD 500 / day (max USD 10,000)
Criminal penalties of up to $10,000 and imprisonment of up to two years
BEWARE OF SOLICITATIONS/SCAMS:
The FinCEN website has an alert warning people about fraudulent scams. Specifically, they warn about the following:
Correspondence requesting payment. There is NO fee to file BOI directly with FinCEN. FinCEN does NOT send correspondence requesting payment to file BOI. Do not send money in response to any mailing that claims to be from FinCEN or another government agency.
Correspondence that asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. Do not click any suspicious links or attachments or scan any QR codes in emails, on websites, or in any unsolicited mailings.
Correspondence that references a “Form 4022,” or an “Important Compliance Notice.” This correspondence is fraudulent. FinCEN does not have a “Form 4022.” Do not send BOI to anyone by completing these forms.
Correspondence or other documents referencing a “US Business Regulations Dept.” This correspondence is fraudulent; there is no government entity by this name.
The above information is provided for general purposes and should not be relied on as legal advice. We encourage all companies to reach out to their legal counsel for specific guidance.
For additional information regarding the new BOI reporting requirements, visit https://www.fincen.gov/boi.