We are writing to share essential information about the Beneficial Ownership Information (BOI) reporting requirements recently implemented by the U.S. Department of the Treasury under the Corporate Transparency Act (CTA). These requirements may impact your business, and we encourage you to seek guidance from a qualified professional for any questions or assistance regarding compliance.
What is Beneficial Ownership Information?
Beneficial ownership information refers to details about individuals who directly or indirectly own or control a company.
Why is BOI Reporting Required?
The CTA, passed in 2021, aims to enhance corporate transparency by preventing bad actors from exploiting shell companies and other opaque ownership structures to conceal ill-gotten gains. As part of this initiative, businesses must report their BOI to the U.S. Department of the Treasury.
Does My Company Need to Report BOI Now?
Deadlines depend on when your company was created or registered:
- Before January 1, 2024: File your initial BOI report by January 1, 2025.
- In 2024: File within 90 calendar days of receiving notice of your company’s creation or registration.
- On or after January 1, 2025: File within 30 calendar days of receiving notice of your company’s creation or registration.
For additional details, visit the BOI E-Filing website at https://boiefiling.fincen.gov.
Does This Apply to Sole Proprietorships or S-Corporations?
- Sole Proprietorships: These are not reporting companies unless they were created or registered in the U.S. by filing a document with a secretary of state or similar office.
- Filing with a Secretary of State or Similar Office:
A sole proprietorship only becomes a “reporting company” under the BOI reporting rules if it was formally created or registered in the U.S. by filing certain documents with a state-level authority, such as a secretary of state’s office. Examples might include:- Registering a legal business entity (e.g., forming an LLC or corporation).
- Registering as a foreign entity to do business in the U.S.
- Filing with a Secretary of State or Similar Office:
- S-Corporations: These are subject to BOI reporting requirements if they meet the criteria for reporting companies, regardless of their tax treatment under Subchapter S.
Penalty For Failing to File on Time?
If a business owner fails to file their Beneficial Ownership Information (BOI) report on time, penalties can be significant. Civil penalties of up to $500 per day may accrue for each day the violation continues. Additionally, criminal penalties can include fines of up to $10,000 and imprisonment for up to two years for willful noncompliance. Senior officers of the entity may also be held accountable for such failures.
The filing deadlines depend on when the business was formed or registered. For example, entities formed before January 1, 2024, must file by January 1, 2025. Newly formed businesses in 2024 have 90 calendar days from their creation to file, while businesses formed after January 1, 2025, will have just 30 calendar days.
To avoid penalties, it’s essential to prepare and submit accurate BOI reports on time. If you believe the submitted report contains inaccuracies, the law provides a 90-day safe harbor period to correct errors without incurring penalties
What Should You Do?
We strongly recommend consulting with a legal professional who specializes in regulatory compliance to determine how these requirements apply to your specific situation. Unfortunately, we are unable to provide legal or regulatory advice on this matter.
If you have questions about this requirement or need guidance, please reach out to a trusted professional or refer to the FinCEN BOI E-Filing website at https://boiefiling.fincen.gov for more information. You can also check out this FAQ page.