New Federal Reporting Requirement for Beneficial Ownership Information (BOI) – First deadline approaching soon.
NEERAJ BHATIA, CPA, CA, Attorney
An accomplished accounting professional & Attorney with 30+ years expertise in international and domestic tax planning
Starting January 1, 2024, almost every small business is required to file a Beneficial Ownership Information
Companies required to report Beneficial Owner Information (BOI) to FinCEN are called reporting companies.
Who needs to file –
The following companies, called the “Reporting companies”, may be required to report:
●???? Domestic reporting companies: These include corporations, LLCs, and other entities created by filing with a secretary of state in the US.
●???? Foreign reporting companies: These include entities registered to do business in the US by filing with a secretary of state.
Exemptions:
The Reporting Rule exempts twenty-three (23) specific types of entities from the reporting requirements
Additionally Large operating companies are also entitled for this exemption. For this purpose, an entity qualifies as a Large operating company if the entity employs more than 20 full-time employees in the United States, has an operating presence at a physical office in the US, has a Gross receipts or sales of more than $ 5 million from sources within the US, as reported on its Federal Income Tax return.
How to Report?
Reporting companies are required to file a BOI report, electronically through FinCEN’s website: www.fincen.gov/boi.
When to Report?
Filing of BOI reporting with FinCEN has started on January 1, 2024. The filing timeline depends upon when the entity was formed.
·???????? If the reporting entity was formed prior to January 1, 2024, it will have until January 1, 2025 to report BOI.
·???????? If the reporting entity has been/ will be formed any time during calendar year 2024, it must file BOI report within 90 calendar days after of formation.
·???????? If the reporting entity will be formed any time on or after January 1, 2025, it must file BOI report within 30 calendar days after of formation.
·???????? Any updates or corrections to beneficial ownership information that were previously filed with FinCEN must be submitted within 30 days.
Information needed in the BOI Report:
Information about the Reporting Company:
●???? Full legal name of each beneficial owner.
●???? Any trade name or DBA name
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●???? Current US address.
●???? State/ Jurisdiction of formation
●???? Employer’s Identification number of the entity (or Tax Identification number of the foreign reporting company)
Information about the Beneficial Owner(s)
Beneficial owner is any individual who Directly or indirectly controls the business of Reporting company or who owns or controls at least 25% of that business's ownership interests.
The following information is required to be reported of each beneficial owner:
●???? Full legal name of each beneficial owner.
●???? Date of birth.
●???? Current residential address.
●???? Unique identification number, Passport or Driver's license number along with copy of such unexpired document
Information about the Company applicants
Company applicants are the persons who directly filed the document that created a domestic reporting company, or the individual who directly filed the document that first registered a foreign reporting company. These also include individuals who were primarily responsible for directing or controlling the filing of the creation or first registration document.
A reporting company is required to report its company applicants if it is either a domestic reporting company created on or after January 1, 2024, or is a foreign reporting company first registered to do business in the United States on or after January 1, 2024. Each reporting company that is required to report company applicants will have to identify and report to FinCEN at least one company applicant, and at most two applicants who are individuals.
The information required to report in respect of the Company applicants is the same as that of required of Beneficial Owners.
The willful failure to report complete or updated BOI report to FinCEN , or the willfully providing false or fraudulent BOI report may result in a civil or criminal penalties as follows:
●???? Fines up to $500 per day.
●???? Up to 2 years imprisonment.
●???? Fine up to $10,000.
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