Beneficial Ownership Information Reporting (BOI)

The Corporate Transparency Act of 2020 (CTA), enacted January 1, 2021, created new reporting requirements relating to the beneficial owners of certain companies doing business in the U.S. Beginning in 2024, certain companies must file a Beneficial Ownership Information Report (BOI report) with the Financial Crimes Enforcement Network (FinCEN) to disclose the individuals who ultimately own or control a company.

Who Must File

Domestic and foreign reporting companies that are created or registered by filing documents with the secretary of state (SOS) or similar office are subject to the BOI reporting requirements. This includes a corporation, an LLC, or any other entity type.

However, there are over 20 exemptions. Most of these exemptions are for entities such as financial institutions, insurance companies, securities brokers, and other types of entities that are already required to report ownership information to a governmental authority.

Some notable exemptions include the following entities:

•  Accounting Firms. Any public accounting firm registered in accordance with Section 102 or the Sarbanes-Oxley Act of 2002.
•  Large Operating Companies. Any entity with more than 20 full-time U.S. employees and an operating presence at a physical office in the U.S. that reported more than $5,000,000 in gross receipts on its prior year federal income tax or information return 
• Inactive Entities. Any entity that (1) was in existence on or before January 1, 2020; (2) is not engaged in active business; (3) is not foreign owned; (4) has had no ownership changes in the prior 12 months; (5) has had no transactions greater than $1,000 in the prior 12 months. 

When to File

• For existing reporting companies created or registered before 2024, the initial report is due January 1, 2025.
• For companies created or registered in 2024, the BOI report is due 90 days from the formation or registration date.
• For companies created or registered after 2024, the filing deadline reverts to 30 days.

How to File

FinCEN expects that many reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued.

The e-filing portal https://boiefiling.fincen.gov/ provides two methods to submit a BOI report: (1) fill out a web-based version of the BOI report and submit it online or (2) upload a completed PDF version of the BOI report. A BOI report cannot be faxed or mailed to FinCEN.

Reporting companies that need help meeting their reporting obligations can consult with professional service providers.

Given the nature of the CPA-client relationship, a client’s first inclination may be to turn to their CPA for advice on the BOI.  However, advising a client on BOI reporting is potentially regarded as the unauthorized practice of law (UPL). Therefore, businesses are encouraged to seek legal counsel for BOI compliance.  

Penalties for Not Filing

The fine for willfully failing to complete an initial or updated report or for willfully providing false or fraudulent information to a reporting company is $500 per day, up to $10,000 and imprisonment for up to two years. The fine for knowingly disclosing or using BOI without authorization is $500 per day, up to $250,000 and imprisonment for up to five years.

As always, should you have questions on this or other matters affecting you or your business, please call  or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.