BOI Filing Requirement
As of January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) will require most legal entities to report its Beneficial Ownership Information (BOI). Entities required to report are called Reporting Entities.
Reporting Companies consist of corporations, LLCs, or any business entity created through filing a registration document with a secretary of state or similar office under the laws of a state or Indian tribe, or such entity formed under the law of a foreign country that filed a document with a secretary of state or any similar office to register to do business in any US state or tribal jurisdiction.
Certain entities are exempt from the BOI reporting, including publicly traded companies, nonprofits, and certain large operating companies. These types of companies are already subject to other reporting requirements that provide information sufficient to identify individuals who control them. A list of these types of entities is on the BOI reporting website.
Existing companies, meaning one formed before January 1, 2024, must file their report before January 1, 2025. New companies, meaning those formed or registered on or after January 1, 2024, must file an initial BOI report within 90 days of receiving notice that the registration is effective. Next year, for entities created/registered on or after January 1, 2025, initial reports will be due within 30 days of this effective date.
Civil penalties of up to $500 per day can be imposed for each day beyond the report due date if a report is not filed or fails to provide complete and accurate information. There are much harsher penalties for willful failure or attempt to provide false BOI information.
The BOI report collects the following information:
REPORTING COMPANY INFORMATION:
- Entity name
- Any DBAs or trade names
- Principal US address
- Formation jurisdiction
- Taxpayer ID number
BENEFICIAL OWNER’S INFORMATION:
- Full name
- Date of Birth
- Address
- Personal identification number, issuing jurisdiction, and image of:
* A current US passport
* State driver’s license
* Other ID document issued by a state or local government or tribe
* A foreign passport if the individual doesn’t have any of the other forms of ID
Who is a Beneficial Owner? Any individual who directly or indirectly exercises substantial control over the reporting company or owns or controls at least 25% of its ownership interests is a beneficial owner.
Substantial control means that one of the following tests is met:
1. The individual has a senior position of authority, or
2. The individual has the authority to appoint or remove any senior officer or a majority of the board, or
3. The individual makes or influences important business and financial decisions for the reporting company, or
4. The individual has some other form of substantial control over the reporting company
An individual that controls 25% of ownership interests includes:
1. Equity
2. Stock
3. Voting Rights
4. Capital or Profits interest
5. Instrument convertible to equity, stock, voting rights, or capital or profits interest
6. Options or other non-binding privileges to buy or sell an interest listed above
7. Any other instrument, contract, or mechanism to establish ownership
Reporting companies will have to report beneficial ownership electronically through FinCEN’s website at www.fincen.gov/boi. Instructions and technical guidance is available at the website. On the website is a Small Business Compliance Guide that walks through most of the same information included in this email, as well as a list of exempt entities. Once a report is filed, the system will provide a filer with a confirmation of receipt. Retain this receipt for your records. There is no filing fee.
Any changes or corrections to the information in your filed report must be reported through an updated BOI report within 30 days of the change.
While we believe that most entities will be able to file the BOI report without a problem using the guidance here and on the website, anyone whom the reporting company authorizes to act on its behalf may file on the reporting company’s behalf. If you would like to engage us to assist with this filing, please reach out to discuss the process.
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Do you want to learn more information about how this relates to your current financial portfolio? Give us a call at (410) 823-5442 or email invest@peakeadvisors.com.
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