Ignoring New Filing Requirements for Business Entities is Expensive!

Updated 12/10/2024: The following blog details information about the requirement to report beneficial ownership information to FinCEN by January 1, 2025. A federal court in Texas ruled the Corporate Transparency Act likely unconstitutional, issuing an injunction against FinCEN, and the DOJ has appealed. FinCEN's latest guidance indicates businesses are not currently required to file and will not face penalties for noncompliance. Given this uncertainty, we recommend holding off on filing until the matter is resolved, as submissions to the government cannot be undone.

Starting January 1st, 2025, it will get expensive for companies who fail to comply with the new Beneficial Ownership Information Requirements. Civil penalties can run $500 each day and criminal penalties include fines up to $10,000, plus up to two years of imprisonment. 

If you have a corporate entity, including any small Limited Liability Corporations (LLCs), please read on. Although this rule is relatively quick and easy to follow, failure to comply can trip up otherwise innocent people.

What is BOIR anyway?

The Beneficial Ownership Information Report (BOIR) is an online filing for reporting beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The Corporate Transparency Act requires certain types of U.S. and foreign entities to report beneficial ownership information. Beneficial ownership information is information about the entity, its beneficial owners, and in certain cases its company applicants.¹

Who need to file?

In a nutshell, most legal entities are required to report beneficial ownership information to FinCEN by January 1, 2025. This includes many Limited Liability Corporations that might not consider themselves active businesses. For example, we often see small LLCs established to reduce liability and/or hold family assets. Even small LLCs among friends and family must comply. All required filers are considered reporting companies.

What to include?

Information is required for:

• Reporting Company 
• Beneficial Owners (25% or has substantial control)
• Company Applicants 

Full details are included in the Small Entity Compliance Guide.²

PRO TIP: Each beneficial owner is encouraged to obtain a FinCEN Identification number before filing a company BOIR

How to obtain an individual FinCEN Identifier?

Information required for Beneficial Owners and Company Applicants generally includes a copy of your passport or driver’s license. We strongly encourage you to obtain a FinCEN ID number before a company BOIR is filed. This will avoid having to disclose and attach sensitive documents to each filing. Step-By-Step instructions are available on the FinCEN website.³

When to file?

The filing date depends on when a reporting company was formed. The rules are:

• Companies in existence on January 1, 2024, must file by January 1, 2025
• Companies formed during 2024 must file within 90 days of effective registration
• For companies created or registered to do business after January 1, 2025, the deadline will be 30 days.

PRO TIP: Penalties for failure to file start on January 1, 2025. File BOIRs for all existing reporting companies before year-end.

Where to file?

We recommend filing directly using the BOI E-Filing System. https://boiefiling.fincen.gov/

PRO TIP: When searching for BOIR information online, numerous services appear. For-profit services offer to complete filings for a fee and the fees vary widely. We do NOT recommend using a service. The filing process is relatively straightforward and simple to do yourself.

How to find out more?

BOI E-Filing System: https://boiefiling.fincen.gov/ Beneficial Ownership Information Report (BOIR) Filing Instructions: https://boiefiling.fincen.gov/resources/BOIR_Filing_Instructions.pdf

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

Step-by-Step Instructions for Obtaining FinCEN Identifier (ID): https://fincenid.fincen.gov/assets/helpContent/FinCEN-ID-Step-By-Step-Instructions-20240104.pdf

If you have already complied with the BOIR regulations, CONGRATS! If not, the process is relatively simple and straightforward. The key is to GET IT DONE BEFORE YEAR-END!

We are here to answer any questions you may have.

1 https://boiefiling.fincen.gov/resources/BOIR_Filing_Instructions.pdf

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

3 https://fincenid.fincen.gov/assets/helpContent/FinCEN-ID-Step-By-Step-Instructions-20240104.pdf