Beneficial Ownership Information Reporting

Starting on January 1, 2024, Beneficial Ownership Information (BOI) reports must be filed electronically using the Financial Crimes Enforcement Network (FinCEN) secure filing system. These forms have been developed to help prevent bad actors from hiding or benefiting from their unlawful gains through shell companies or other obscure ownership structures.

Who is required to file the BOI report?
Reporting companies are required to file beneficial ownership information reports that contain information about the company itself and two categories of individuals.

Reporting Company – There are two types of reporting companies:

• Domestic reporting companies – corporations, limited liability companies, trusts that own a reporting company, and any other companies created by the filing of a document with a secretary of state or any similar office in the United States.
  • Exemptions – there are 23 types of companies that are exempt from the new reporting requirement. It’s important to understand these exemptions to determine the filing requirement. One of the common exemptions will be the large operating company exemption which is detailed below.
    • Large Operating Company exemption:
      • Employs > 20 full-time employees in the U.S. (on an entity-by-entity basis, not consolidated);
      • Filed a federal tax return in the previous year with more than $5 million in U.S. gross receipts or sales (on a consolidated basis); and
      • Has an operating presence at a physical office in the U.S. – meaning the company regularly conducts its business at a physical location in the U.S. that it owns or leases and that is physically distinct from the place of business of any other unaffiliated entity.
• Foreign reporting companies – companies (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

Categories of individuals:

• Beneficial owners – is an individual who owns or controls at least 25 percent (directly or indirectly) of the company or has substantial control over the company.
  • Ownership interest – Includes shares of equity, stock, voting rights or any mechanism used to establish ownership, including:
    • Trustee of trust if authority to dispose of trust assets;
    • Grantor of trust if right to revoke the trust or withdraw assets, or;
    • Beneficiary of trust who is sole recipient of income and principal or has right to demand a distribution of or withdraw substantially all trust assets.
  • Substantial control – if an individual falls into any of the four categories below, the individual is exercising substantial control:
    • The individual is a senior officer (ex. President, CFO, GC, CEO, COO, or any other officer who performs similar function).
    • The individual has authority to appoint or remove certain officers or a majority of directors of the reporting company.
    • The individual is an important decision-maker for the reporting company.
  • Company applicant – is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company.
    • Only reporting companies created or registered on or after January 1, 2024, will need to report their company applicants.
    • An accountant or lawyer could be a company applicant, depending on their role in filing the document that creates or registers a reporting company.

Reporting requirements:

A reporting company will have to report:

• Its legal name;
• Any trade names (ex. doing business as or trading as);
• The current street address of its principal place of business if that address is in the United States (ex. a company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States;
• Its jurisdiction of formation or registration; and
• Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).

Note: A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.

A reporting company will have to report the following information about its beneficial owners:

• The individual’s name;
• Date of birth;
• Residential address; and
• An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document.

A reporting company will have to report the following information about its company applicant:

• The individual’s name;
• Date of birth;
• Residential address; and
• An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of identification document.

Acceptable forms of identification that will meet the reporting requirement:

• A non-expired U.S. driver’s license;
• A non-expired identification document issued by the U.S. state or local government, or Indian Tribe;
• A non-expired passport issued by the U.S. government; or
• A non-expired passport issued by a foreign government (only when an individual does not have one of the other three forms of identification listed above).

When are the BOI forms required to be filed?
The filing deadline depends on when the company was created or registered with the state.

• Reporting companies created or registered before January 1, 2024, have until January 1, 2025 to file their initial BOI reports.
• Reporting companies created or registered after December 31, 2023, have 90 days to file their initial BOI reports.

If the BOI form was filed incorrectly or needs to be updated, the reporting company will have 30 days after noticing the error or 30 days after a change occurred.

Reports will be accepted starting on January 1, 2024.

Due to the quick 90-day turnaround to file the initial BOI report for companies created or registered on or after 1/1/2024, it is important to notify the person responsible for updating your BOI filing within the required period.

For entities created or registered with the state after 12/31/2023, we recommend the person handling the creation or registration be the one to file the initial BOI form at that time. This form will be available on the FinCEN website starting January 1, 2024.
For entities that were created or registered with the state prior to 1/1/2024, we recommend speaking to legal counsel to assist with filing the initial BOI forms.

Alert:

FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act (CTA). The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages or click on any links or scan any QR codes within them.