The government entity known as FinCEN (Financial Crimes Enforcement Network) has imposed a new filing requirement on businesses that file with the Secretary of State in any state in the United States. This usually means LLC’s, Corporations, and some trusts.
The new requirement is called the Beneficial Ownership Information Report or BOI. The purpose of the report is to cut down on money laundering crimes.
- If your business was registered with your state’s Secretary of State before 1/1/24, you have until 1/1/25 to complete the report.
- If your business was registered with your state’s Secretary of State on or after 1/1/24, and before 1/1/25, you have 90 days from date of registration to complete the report.
- If your business was registered with your state’s Secretary of State on or after 1/1/25, you have 30 days from date of registration to complete the report.
- If you have any changes to your business information after your first report filing, the BOI report must be updated within 30 days of the change.
Who must file?
Any business that is registered with a Secretary of State in the U.S. or similar office under state law or Indian tribe. Some businesses are exempt depending on service line and business structure:
What’s in the Report?
To file the Report, you’ll need basic information for the business, such as: Tax ID Number, date formed, and Address. You’ll also need information for all beneficial owners, including: date of birth, address, and an identifying document.
Who’s a Beneficial Owner?
- A beneficial owner has substantial control over the company or owns/controls at least 25% of the ownership interests of a reporting company
- Examples: President, CFO, CEO, COO
- An individual with the ability to appoint or remove senior officers or a majority of the board of directors
- An important decision maker over structure, finances, nature and scope of the business
- For trusts, this can be a trustee or other individual that has the authority to dispose of trust assets, a beneficiary that is the sole recipient of trust income and principal that can demand distribution or withdraw, or a grantor or settlor with the right to revoke or withdraw trust assets
What happens if I don’t file?
FinCEN has steep penalties for failure to report timely or false or fraudulent information. You may be subject to civil or criminal penalties, including civil penalties of up to $500 per day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable.
For more information, refer to FinCEN’s website: https://www.fincen.gov/boi