Beneficial Ownership Information Reporting - What is it?
Background:
In 2021, Congress passed the Corporate Transparency Act, which came into effect on January 1, 2024. This law creates a new reporting requirement for U.S. companies as part of the U.S. government’s attempt to combat money laundering and terrorist financing.
What report must be filed?
A Beneficial Ownership Information (BOI) report, filed with FinCEN (the Financial Crimes Enforcement Network, a bureau within the United States Department of the Treasury).
Who must file a report?
The requirement to report applies to most registered U.S. companies that are not explicitly exempt, as further discussed below. It is expected that most small businesses will need to file a BOI report by the deadlines stated later.
Are there any exemptions for who must file?
Yes. There are 23 types of companies who are exempt, of which many are already heavily regulated and thus already report BOI (such as banks, insurance companies, accounting firms, and investment companies). In addition, certain "large operating companies" are exempt from filing. To qualify for an exemption as a large operating company, the company must meet the requirements stated in the immediate paragraph below.
You may potentially be exempt from filing if your company (i) has more than 20 full-time employees in the U.S.; (ii) reported more than $5 million in annual revenue on your prior year U.S. tax return; AND (iii) has a physical operating office in the U.S.
If you are not exempt, Corporate Payroll Services can help you with this filing for a one-time charge of $175, or you can file it yourself for free using the link below.
When are the deadlines to file?
A company created before January 1, 2024, must file an initial BOI report by January 13, 2025.
A company created in 2024 must file its BOI report within 90 calendar days after receiving its notice of formation.
A company created on or after January 1, 2025 must file its report within 30 calendar days after receiving its notice of formation.
What are the penalties for not filing a BOI report?
The penalties for willfully violating BOI reporting requirements are serious, including:
civil penalties of up to $591 for each day that the violation continues (adjusted annually for inflation); and
criminal penalties of up to two years imprisonment and a fine of up to $10,000.