Beneficial Ownership Information (BOI) Reporting: Frequently Asked Questions

The Corporate Transparency Act (CTA), enacted Jan. 1, 2021, requires many entities to file a beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) beginning in January 2024. Its goal is to increase transparency about who owns or controls an entity and deter money laundering activities.

1.       Who needs to file?

Domestic and foreign reporting companies.

·       Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.

·       Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

 2.       Who is exempt from filing?

·       Business entities that were not formed by filing a document with the secretary of state or similar official do not need to file a BOI. Ex: Self-employed individuals who have not formed an LLC or a corporation for their business, general partnerships, etc.

·       23 types of entities are exempt from the beneficial ownership information reporting if they meet specific requirements. For further information, refer to the BOI compliance guide at this link. https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf

·       Certain “large operating entities” are exempt if they employ more than 20 people in the U.S.; have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and are physically present in the U.S.

3.       Who needs to be reported?

Beneficial owners and company applicants (only for companies created on or after January 1st, 2024).

·       A beneficial owner is an individual who owns or controls at least 25% of a company or has substantial control over the company.

·       A company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company. For instance, if your attorney personally filed the articles, or directed the filing of the articles by another person, such as a paralegal in the attorney’s law firm, he or she should be listed as a company applicant. The paralegal would also be a company applicant.

4.       What information will a reporting company have to report about itself?

A reporting company will have to report:

·       Its legal name;

·       Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;

·       The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters);

·       Its jurisdiction of formation or registration; and

·       Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).

A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.

5.       Is there a requirement to annually report beneficial ownership information?

No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and updated or corrected BOI reports as needed.

6.       When do I need to file?

·       Reporting companies created or registered to do business before January 1, 2024 have until January 1st, 2025.

·       Reporting companies created or registered on or after January 1, 2024, and before January 1, 2025, have 90 calendar days after receiving actual or public notice that their company’s creation or registration is effective to file their initial BOI reports.

·       If there is any change to the required information about your company or its beneficial owners in a beneficial ownership information report that your company filed, your company must file an updated report no later than 30 days after the date of the change.

7.       If a person listed on the BOI report is later dismissed from the company, does this trigger an entirely new BOI report?
Yes, the BOI report must be kept up to date. If there is a change in the company’s beneficial owners, the company must file an updated BOI report no later than 30 days after the date on which the change occurred.

8.       How do I file?

BOI e-filing system allows for filing the BOI report online or PDF. Refer to this link to file your report https://boiefiling.fincen.gov/fileboir

9.       Will my CPA file a BOI report for me?

Do NOT assume your CPA will file a report for you. FinCEN expects that many, if not most reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers such as lawyers or accountants.

10.   Will there be a fee for submitting a beneficial ownership information report to FinCEN?

No. There is no fee for submitting your beneficial ownership information report to FinCEN.

11.   I own a single rental property in an LLC. Do I have to file a BOI report?

Yes, you must file a BOI report for every active LLC you own. It makes no difference how many properties the LLC owns. The only exception is if the LLC has more than 20 full-time employees and reported more than $5 million in U.S.-sourced income on its prior-year tax return—these are FinCEN-defined “large operating companies” that are not required to file a BOI report.

12.   What are some of the penalties if I do not file a BOA?

A person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.

13.   Where can I get further information about BOI?

FinCEN has put together the resources below for further information on BOI. Email us at contact@lobecpa.com for questions or concerns.

https://www.fincen.gov/boi-faqs#C_2

https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf