FinCEN Beneficial Ownership Rule effective Jan 1, 2024
The beneficial ownership information (BOI) reporting rule implementing Section 6403 of the Corporate Transparency Act (CTA) was finalized by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) in September 2022.
The BOI rule starts taking effect on January 1, 2024 and sets a 90-day deadline for companies formed in 2024 to submit required reports. Thus, an entity that is created on January 15, 2024, must file the BOI report by April 15, 2024.
For companies in existence prior to 2024, the BOI report is due on or before January 1, 2025.
My recommendation for companies in existence prior to 2024 is to address filing the BOI report this summer to see if the rules have changed as many open questions about the BOI reporting have not yet been answered.
What is unclear is whether an attorney must file this BOI report or can your CPA file the BOI report.
You should coordinate this discussion with your attorney to make sure the filing responsibility is properly addressed.
This reporting requirement applies to a legal entity established via the Secretary of State: i.e. LLC, S Corp, C Corp, or Partnership.
There are a limited number of exemptions to the BOI filing rules:
- Large operating companies, which the BOI rule defines to include any company that employs more than 20 full-time employees in the US, has more than $5,000,000 in gross receipts or sales in the US and has an operating presence at a physical office within the US.
- Public companies, based on the BOI rule definition of a “securities reporting issuer.”
- Certain types of regulated entities, such as insurance companies, banks, credit unions, brokers or dealers in securities, and money services businesses (MSBs).
- Entities involved in private equity and venture capital – specifically, investment companies, investment advisers, pooled investment vehicles, and venture capital fund advisers – are subject to certain criteria.
The penalties are steep for failing to file:
Any person who willfully provides, or attempts to provide, false or fraudulent BOI data to FinCEN – or willfully fails to report complete or updated BOI data to FinCEN – may be subject to civil or criminal penalties of up to $10,000 and up to two years in prison.
Here are two links to learn more:
https://www.fincen.gov/sites/default/files/shared/BOI%20Informational%20Brochure%20508C.pdf