What is the Beneficial Ownership Information (BOI) Reporting Requirement?

The Corporate Transparency Act of 2021 mandates that BOI reporting to the Financial Crimes Enforcement Network (FinCEN) starting in 2024.

Beneficial owner: A beneficial owner is an individual who directly or indirectly has control over an entity or owns at least a 25% equity interest in that entity. The ownership can either be direct, or indirect (through a trust or other entity).

Applies to: The BOI reporting requirement applies to corporations, S-Corps, LLCs and most partnerships.  Sole proprietors are not subject to BOI reporting requirements.

Required Reporting: The BOI reporting requires the following for each beneficial owner:

  1. Full legal name
  2. Date of birth
  3. Resident or business address
  4. Social security number, taxpayer identification number or a passport number (for foreign individuals)
  5. Nature of ownership or control. This includes percentage of ownership, voting rights or other control indicators.

Deadlines: Entities in existence prior to January 1, 2024 have until January 1, 2025 to file.

Entities that formed in calendar year 2024 have 90 days (from the date of notice of creation of the entity) to file.

Entities that form after January 1, 2025 have 30 days to file from the date of notice of creation of the entity.

Penalties for Non-Compliance or False Reporting: Penalties for noncompliance or for false/fraudulent reporting can include:

  1. Civil penalties of $591/day for each late filing, with a maximum penalty of $10,000.
  2. Criminal penalties up to $10,000 and/or imprisonment for up to two years.
  3. Unauthorized disclosure penalty of $591/day for each violation with no maximum penalty.

What this means for your business: Your business should maintain accurate records of ownership structures and be prepared to report any changes properly. Compliance may require involve changes especially for entities with complex ownership structures.

Where to report: You can directly file your BOI on the following FinCEN website: https://boiefiling.fincen.gov/