Beneficial Ownership Information Reporting
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This reporting mandate takes effect from January 1, 2024
Ready to File Your BOI Report?
In September 2022, the Financial Crimes Enforcement Network (FinCEN) introduced a final rule to implement the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) report. This rule aims to bolster government agencies’ capacity to safeguard national security and financial systems by preventing illicit use and curbing money laundering or concealment by criminals, including drug traffickers and fraudsters.
The new regulation outlines which entities are required to submit a BOI report, the information to be reported, and the deadlines for submission. Specifically, Corporations and Limited Liability Companies must file reports disclosing the beneficial owners and company applicants of the entity.
Important BOI reporting dates include:
- FinCEN will commence accepting BOI reports on January 1, 2024.
- New businesses formed on or after January 1, 2024, must file within 90 days of business formation.
- Existing businesses established before January 1, 2024, must file before January 1, 2025.
Request a BOI Report
Who Needs to File a BOI Report?
The rule distinguishes between domestic and foreign reporting companies as the two categories obligated to file a report.
A domestic reporting company encompasses a Corporation, Limited Liability Company (LLC), or any entity established through the submission of documentation to a secretary of state or equivalent office under the law of a state or Indian tribe.
A foreign reporting company is defined as a Corporation, LLC, or other entity constituted under the law of a foreign country and registered to conduct business in any state or tribal jurisdiction through the submission of documentation to a secretary of state or equivalent office. The rule, aligned with the CTA, provides exemptions for twenty-three types of entities from the “reporting company” definition.
FinCEN anticipates that these definitions will encompass Limited Liability Partnerships, Limited Liability Limited Partnerships, Business Trusts, and the majority of limited Partnerships, as these entities are typically established through filing with a secretary of state or similar office.
Beneficial Owner Information Report
Frequently Asked Questions
What is a beneficial ownership information report (BOIR)?
How is the beneficial ownership information report connected to the Corporate Transparency Act?
BOI reporting is mandated by the Corporate Transparency Act (CTA), which was enacted in 2021. The purpose of this reporting is to establish consistent requirements for business entities to disclose personal information about those who own or control the company. This measure aims to identify and prevent various forms of illegal activities, including tax fraud, money laundering, drug trafficking, and financing of terrorism.
Is every company required to file a BOI report?
The majority of registered business entities, both domestic and foreign, fall under FinCEN’s definition of a “reporting company.” This includes corporations, limited liability companies, and other entities formed through the filing of documents with a secretary of state or a similar office, whether at the state or tribal level.
However, certain business structures, like Sole Proprietorships and General Partnerships, which do not undergo formal registration processes, are exempt from the requirement to file a beneficial ownership report.
Who is exempt from the reporting rule?
FinCEN has specified 23 exemption categories. If an entity falls within one of these categories and satisfies the specified exemption criteria, it is not obligated to submit a beneficial ownership report. These exemptions are primarily designed for entities already subject to stringent regulation by both federal and state governments.
- Securities reporting issuer
- Governmental authority
- Banks
- Credit unions
- Depository institutions holding company
- Money services business
- Broker or dealer in securities
- Securities exchange or clearing agencies
- Other Exchange Act registered entites
- Investment companies or investment advisers
- Venture capital fund advisers
- Insurance companies
- State-licensed insurance producers
- Commodity Exchange Act registered entities
- Public utilities
- Financial market utilities
- Pooled investment vehicles
- Tax-exempt entities
- Entity assisting a tax-exempt entities
- Large operating companies
- Subsidiary of certain exempt entities
- Inactive entities
- Public accounting firms registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7212)
Simply falling into any of these categories does not automatically make a reporting company exempt. Each category has specific criteria that must be met to qualify for exemption. Refer to FinCEN’s Small Entity Compliance Guide for details.
When are beneficial ownership reports due?
FinCEN will begin accepting BOI reports on January 1, 2024. Deadlines depend on when a reporting company was created or registered.
- For reporting companies established or registered to conduct business before January 1, 2024, the initial BOI report must be submitted by January 1, 2025.
- Reporting companies established or registered between January 1, 2024, and January 1, 2025, must submit the initial BOI report within 90 days of the entity's formation.
- Reporting companies established or registered on or after January 1, 2025, must submit the initial BOI report within 30 days of the entity's formation.
Who is a beneficial owner of a reporting company?
- A beneficial owner of a reporting company is an individual who directly or indirectly owns or controls 25% or more of the ownership interests or exercises substantial control over the entity.
- Certain individuals are not considered beneficial owners, including employees in non-senior positions whose benefits derive solely from their employment, individuals with future ownership through inheritance (to be reported upon inheritance), custodians, nominees, intermediaries, agents of other individuals meeting the definition, and minor children (with reporting information about a parent or guardian instead).
- Creditors of the reporting company are also excluded from the beneficial owner category.
What is considered an ownership interest?
- A beneficial owner in a reporting company is defined as an individual who directly or indirectly owns or controls a minimum of 25% of the ownership interests.
- Ownership interests encompass various forms, including equity, stock, capital or profit interest, voting rights, instruments convertible into stock or other interests, options, and any other contracts or mechanisms establishing ownership.
What does “substantial control” over a reporting company mean?
An individual is deemed to have substantial control if they fulfill one or more of the following criteria:
- Hold a senior officer position such as CEO, CFO, COO, or an executive role with significant authority;
- Possess the power to appoint or dismiss senior officers and members of the board of directors or equivalent governing body; or
- Exercise influence or direction over crucial decisions affecting the company. Important decisions may encompass areas such as reorganization, mergers, amendments to governance documents, changes in business lines, expansion into new markets, determination of senior officers’ compensation structures, dissolution of the business, contract agreements, and the sale or lease of principal assets.
What are some examples of substantial control?
Substantial control can be either direct or indirect. Instances of direct substantial control encompass activities like serving on the reporting company’s board of directors, owning or controlling a majority of voting power or voting rights, and possessing rights linked to financing or interest. Indirect substantial control, on the other hand, involves scenarios such as controlling intermediary entities that wield substantial control over a reporting company and having financial or business connections with other entities or individuals acting as nominees.
Is there a limit to how many beneficial owners we have to report?
Reporting companies must identify ALL individuals who meet the definition of a beneficial owner and do not qualify as an exception to the reporting rule.
Who is a company applicant?
Does every reporting company have to identify a company applicant?
No. Only domestic reporting companies created on or after January 1, 2024 and foreign reporting companies first registered to do business in the U.S. on or after January 1, 2024 must include their company applicants in their BOI report.
What details must we include about our company and its beneficial owners and company applicants?
Reporting companies are required to furnish the following details regarding their business entity:
- Legal name
- DBAs or trade names
- Principal business address in the U.S.
- Formation or registration jurisdiction (state, tribal, or foreign)
- Federal taxpayer ID number (TIN, Social Security Number, EIN)
The necessary information about beneficial owners and company applicants includes:
- Full legal name of the individual
- Date of birth
- Residential street address (Business addresses may be used by company applicants in certain cases)
- Personal identification number and issuing jurisdiction from a non-expired U.S. passport, state driver’s license, or other ID document issued by a state, local government, or tribe — along with an image of the ID document. (Foreign passports can be used by individuals lacking other forms of ID.)
For added convenience in the filing process, reporting companies, beneficial owners, and company applicants can acquire a FinCEN identifier, which obviates the necessity to input specific details in the BOI report.
What is a FinCEN ID number?
A FinCEN identifier is a distinct number provided upon request to a reporting company, beneficial owner, or company applicant. The use of FinCEN identifiers enables reporting companies to enhance efficiency when filling out their BOI forms. Obtaining a FinCEN identifier is not obligatory.
A reporting company can request a FinCEN identifier by selecting the specified option on its BOI report. Individuals have the option to request a FinCEN identifier through an electronic application process.
How do I report my company’s beneficial ownership information?
Commencing from January 1, 2024, you will submit your BOI report via FinCEN’s secure filing system. Instructions and technical guidance for the filing process will be accessible in the BOI section of the FinCEN website.
Do I have to file a BOI report every year?
No, but if there are any changes to the information related to your reporting company or its beneficial owners, you may need to submit an updated report.
What if any information on our BOI report has changed or we made a mistake?
FinCEN mandates that reporting companies submit an updated report within 30 calendar days if there are any relevant changes or if they discover inaccuracies in the information provided in their BOI report.
Are there penalties for not reporting beneficial ownership information?
Absolutely, there are consequences for non-compliance. Late submission of a BOI report may result in civil penalties of up to $500 per day for each day the report is overdue.
Additionally, intentional failure or an attempt to provide false or fraudulent beneficial ownership information could lead to criminal penalties, including imprisonment for up to two years and/or a fine of up to $10,000. It is crucial for reporting companies to adhere to the deadlines and provide accurate information to avoid these penalties.
What happens if an exempt company files a BOI report? Is there a downside?
It’s important to note that while some individuals may view the disclosure of beneficial ownership information as unnecessary and a potential reduction of privacy, complying with these regulations is a legal requirement. Failure to provide accurate and timely information may lead to penalties and fines. The primary goal of these regulations is to enhance transparency and prevent illegal activities such as money laundering, tax fraud, and terrorism financing. Businesses should carefully consider the legal implications and ensure compliance with beneficial ownership reporting requirements.
How will FinCEN use my information? Do they share it with anyone else?
FinCEN will securely store all collected information in a protected database, and it will not be publicly accessible. Authorized government officials at the federal, state, local, tribal, and foreign levels may request access to beneficial ownership information for activities related to national security, intelligence, and law enforcement. Financial institutions may also access this information under specific circumstances if the reporting company provides consent. It’s crucial for businesses to be aware of the privacy and security measures in place while complying with these reporting requirements.
How can I get help with our BOI report?
Ultimately, reporting companies bear the responsibility of filing their beneficial ownership information report and certifying the accuracy and completeness of the provided information. The individual filing the BOI report as an agent on behalf of the reporting company certifies it on the entity’s behalf.
If you require assistance in understanding whether you are obligated to file a BOI report or in identifying who should be reported as beneficial owners or company applicants, seeking guidance from an accountant or attorney is advisable.
For those who prefer professional assistance with preparing and filing the report, CorXec is available to serve as your agent and submit the report on behalf of your company.
What If Scenarios for BOI Reporting
- If you have an association (like a homeowner’s association) where no stock or ownership of the corporation exists, would all of the board of directors be beneficial owners?
Reporting would be required for anyone who exercises substantial control of the entity or owns/controls more than 25% of the ownership interests.
- If Company A, is equally owned by Corporation B and Corporation C, and Corporation B and C are subsequently owned by an individual, is Company A required to file a BOI report or only Corporations B and C?
Company A would be required to file a BOI report, and the beneficial owner would be the individual who owns Company B and C. Beneficial owners are individuals unless the entity is solely owned by an exempt entity.
- Would a husband and wife-owned LLC or Partnership that is disregarded for tax purposes (income and expenses reported on Schedule C) be considered beneficial owners for BOI reporting?
Married spouses are considered separate beneficial owners for purposes of the BOI report, so both would need to be included.
- Are spouses considered beneficial owners in a community property state where a single member LLC owner is married?
No, only the actual person controlling the business operations would be listed on the report.
- What happens if an existing reporting company has a change in ownership prior to filing its initial BOI report in late 2024? Does the initial report need to include any information about the owners who sold their interests in early 2024?
The initial BOI report should be the most current information. If the information changes before the report is filed, the old information doesn’t need to be reported. If the information changes after filing the report, an amended report can be filed.
- Would a husband and wife-owned LLC or Partnership that is disregarded for tax purposes (income and expenses reported on Schedule C) be considered beneficial owners for BOI reporting?
Married spouses are considered separate beneficial owners for purposes of the BOI report, so both would need to be included.
- Are spouses considered beneficial owners in a community property state where a single member LLC owner is married?
No, only the actual person controlling the business operations would be listed on the report.
- What happens if an existing reporting company has a change in ownership prior to filing its initial BOI report in late 2024? Does the initial report need to include any information about the owners who sold their interests in early 2024?
The initial BOI report should be the most current information. If the information changes before the report is filed, the old information doesn’t need to be reported. If the information changes after filing the report, an amended report can be filed.
- Would a Public Benefit Corporation be required to submit a BOI report?
If a Public Benefit Corporation has tax exempt approval under Section 501(c) of the Internal Revenue Code of 1986, they are not required to file a BOI report.
- Is a Sole Proprietorship who files a Schedule C Profit and Loss From Business tax form, and is registered with a state, required to file the BOI report?
Yes. In this case, they would be required to file a BOI report.
- In a single-member LLC that is taxed as a Sole Proprietorship required to file a BOI report?
Yes, they are required to file a BOI report because they are formally registered with the Secretary of State.
- Is a business created as a county registered DBA required to file a BOI report?
No. This type of business is not required to file.
- Which accounting firms are not required to file a BOI report?
An entity that is a public accounting firm registered in accordance with section 102 of the Sarbanes- Oxley Act of 2002 is exempt from BOI reporting. All other accounting firms should file a BOI report.
- Is a single-member LLC that provides accounting services exempt from BOI reporting?
No. An LLC that provides accounting services is only exempt if it meets the accounting exemption requirement, which is an entity that is a public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002.
- If a tax professional files a BOI report on behalf of a tax client, is the tax professional considered the company applicant?
No, the company applicant is the person who actually formed the entity with the Secretary of State.
- Are S Corporations or companies owned by multiple trusts exempt?
S Corporations and entities owned by trusts are still required to file. The only reason for not reporting would be related to other exemption criteria.
- What information is required if the owner of a reporting company is another private or publicly traded company?
An individual is required to be listed as a beneficial owner unless the reporting company is owned by an exempt entity. If the owning entity is not exempt, then by default, the individual beneficial owners of that entity would also be the beneficial owners of the reporting company.
- Does a trust that owns rental properties for multiple beneficiaries have to file?
Trusts are exempt if they meet the requirements in paragraph 1 or 2 of the Internal Revenue Code section 4947.
- What if the beneficial owner is an irrevocable trust? Do you disclose the trust grantor the trustee or the beneficiaries of the trust?
Trusts are exempt if they meet the requirements in paragraph 1 or 2 of the Internal Revenue Code section 4947.
- Regarding exemptions, what qualifies as an inactive entity?
An inactive entity is an entity that was in existence on or before 1/1/2020, is not engaged in any active business, is not owned by a foreign person, has not experienced any change in ownership in the preceding 12-month period, has not sent or received any funds of more than $1,000 in the prior 12 month period, and does not otherwise hold any kind or type of assets either in the USA or abroad, including ownership in another entity.
- What do we report as our main place of business when all employees work from home, and we have no office or main place of business?
The location where most business is conducted should be used. It must be a physical, USA address.
- If the company closes on or before December 31, 2023, do you have to file this BOI?
No. You do not need to file a BOI report in 2024.
- Do you need to file a BOI report for an inactive entity in existence before January 1, 2024, but planning to become active during 2024?
If an entity is formally dissolved with the Secretary of State, a BOI report is not required. If the entity is not formally dissolved, it must meet the inactive company requirements to be exempt. If it does and a BOI report is not filed, once activity resumed, a BOI report would be required.
- What will happen if a domestic corporation closes its physical USA office and has employees working remotely? Would this entity qualify for the exemption?
If the entity formally dissolved the company with the Secretary of State on or before December 31, 2023, a BOI report would not be required.
- Are Limited Partnerships exempt from BOI reporting?
Generally, Limited Partnerships are formed by filing documents with the Secretary of State or similar office. If this is the case, they are required to file a BOI report.
- Are these forms required to be electronically filed or paper filed?
They can be filed online or via paper. Online filings are much simpler and receive automatic feedback.
- Are VCs considered beneficial owners?
Any individual who directly or indirectly has 25% or more ownership in the entity and/or exercises substantial control over the entity is considered a Beneficial Owner.
- Can you use an existing FinCEN identifier that has been used for FBARs (FinCEN 114)?
FinCEN identifiers issued by the FinCEN after filing a BOI can be used for filing BOIs for other entities where they have the same beneficial owner. FinCEN Identifiers issued from other reporting requirements are not valid.
- Are nonprofits owning a C Corporation required to file?
If a nonprofit meets the tax exempt entity requirements, it is not required to file a BOI report. With the exception of money services business, pooled investment vehicles, and entities assisting a tax exempt entity, entities that are not tax exempt and wholly owned or controlled, either directly or indirectly, by any other exempt entity qualify for BOI reporting exemption.
- Are Partnerships who file Form 1065 considered a reporting company?
Any Corporation, LLC, or other entity that was created by the filing of a document with the Secretary of State or other similar office in the USA is required to file a BOI, unless it meets one of the 23 exemptions.
- Will single-member LLCs who do not have an EIN need to obtain an EIN in order to file their BOI report?
Yes.
- Does a company sold in 2023 have to file?
The company itself, if still active, is required to file a BOI Report, but this report would be required by the new beneficial owners.
- Does an SMLLC use their SSN or EIN?
The EIN is required.
- How does a Delaware LLC that is owned by an international company and has a single individual owner file?
The beneficial owner is required to be an individual, so the individual who owns the international company, by default, also owns the Delaware LLC and would be the beneficial owner.
- I have an S Corporation that owns 100% of another S Corporation. Do both companies file a BOI report?
Yes, both companies would be required to file BOI reports. Beneficial owners are required to be individuals, so whoever owns the owning entity, by default are beneficial owner
- If I have an S Corporation that has remote employees in another state, does the BOI need to file as a foreign entity?
Foreign entity BOI reports are for entities doing business in the USA but not registered here. Only one BOI Report is required for a single entity, regardless of how many foreign qualifications they have.
- If my company is registered to do business in multiple states, do I need to file the BOI report for each state?
No. If they are all filed as foreign qualifications, only one BOI Report is required for the domestic state.
- If my company is registered to do business in multiple states, do I need to file the BOI report for each state?
No. If they are all filed as foreign qualifications, only one BOI Report is required for the domestic state.
- If there are two members in an LLC, and one has 1% ownership but all the voting rights, and the other has 99% but no vote, are they both beneficial owners? registered to do business in multiple states, do I need to file the BOI report for each state?
Yes.
- Is a foreign company one that is registered in a foreign country or operating in another state other than the home state?
In terms of BOIs, a foreign company is registered in another country and outside the USA.
- Is a 100% owned subsidiary (S2) of a 100% owned subsidiary (S1) of a company that trades with ADRs (P) exempt based on the parent being publicly traded?
With the exception of money services business, pooled investment vehicle, and entities assisting a tax exempt entity, business entities who are wholly owned or controlled, either directly or indirectly, by any other exempt entity qualify for BOI reporting exemption.
- Is a firm with over 20 employees and over $5,000,000 in revenue exempt from the reporting?
To meet the large operating company exemption, the entity must employ more than 20 full-time employees, more than 20 of the full-time employees must be employed in the USA, the entity must have an operating presence at a physical office in the USA, have filed a federal income tax or information return for the previous year demonstrating more than $5,000,000 in gross receipts or sales, report more than $5,000,000 in gross receipts or sales on the entity’s IRS Form 1120 or other equivalent, and the gross receipts or sales amount must remain greater than $5,000,000 after excluding gross receipts or sales from sources outside the USA.
- Is renewing a driver’s license a change requiring resubmission?
No, changes requiring reporting would be anything that changes in the report itself, such as a change of beneficial ownership, a change in the name of a beneficial owner, etc.
- My synagogue is a New York Corporation. Will it need to file a BOI? If the Board of Trustees changes nearly every year, would we need to resubmit each year?
Unless it meets one of the 23 exemptions, yes a BOI Report would need to be filed once (Initially) and every time a change is made.
- What if an LLC has a member that is an IRA? Will the owner of the IRA be the beneficial owner of the company?
Yes, the individual owner of the IRS will be the beneficial owner of the entity filing the BOI.
- Are incorporated nonprofits such as section 507 clubs or 501c3 entities required to file?
If the entity meets the tax exempt entity exemption, they are not required to file a BOI. To meet the exemption, they must meet any one of the following criteria:
- It is an organization that is described in section 501(c) of the Internal Revenue Code of 1986 (determined without regard to section 508(a) and exempt from tax under section 501(a).
- It is an organization described in section 501(c) of the Code and was exempt from tax under section 501(a) but lost its tax-exempt status less than 180 days ago.
- It is a political organization, as defined in section 527(e)(1) of the Code, that is exempt from tax under section 527(a). or
- It is a trust, as described in paragraph 1 or 2 of Internal Revenue Code section 4947.
- What if a partnership has 20 members with each member owning 5% of the partnership? Are all the members considered beneficial owners?
Beneficial owners are individuals with 25% or more ownership in an entity or an individual who has substantial control over the operations of an entity (meaning they are a senior officer), they have the authority to appoint or remove officers, directors or similar capacity titles, they are an important decision maker, or they have any other form of substantial control over the entity
- What if the person does not have any form of ID?
A form of ID is required, it can be a state-issued drivers license, state-issued ID, valid USA passport or valid foreign passport if none of the others are available. If the beneficial owner is a minor, their parent or guardian would be listed on their behalf.
- What if the person who originally formed the entity with the Secretary of State is no longer associated with the reporting entity?
The person who originally formed the entity is only required for entities formed on or after 1/1/2024. If your entity was formed prior to this date, the company applicant, or person that formed the entity, is not required to be reported/listed.
- Would a company have to fill out the BOI reporting form for every state where they have a location?
No, only one BOI report is required for the domestic state.
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