What is the Beneficial Ownership Information (BOI)?

As the year is closing out it is time to start preparing for the 2024 tax season.

Can you believe the year is almost over?

With that being said, there is another type of filing that the government requires for business owners, and that is the BOI (Beneficial Ownership Information)

What is the BOI?

In 2021, Congress enacted the bipartisan Corporate Transparency Act to help prevent money laundering and other financial crimes. This new law requires many United States companies to report information about their owners. 

As of January 1, 2024, these companies are required to report their beneficial owners, who are individuals who own or control a company, to the Financial  Crimes Enforcement Network (FinCEN). The FinCEN is a bureau within the United  States Department of Treasury.

This new reporting is not an annual requirement. A report only needs to be submitted once or whenever there is a change in the ownership information.  To file this report, go to https://boiefiling.fincen.gov/ and select File BOIR. This is a secure site, and it is also free to file. There are a lot of emails reminding you need to file, which are companies asking you to pay them to file this report for you, but who needs to file?

Under the law, a company may be required to report information about its  beneficial owners if it is: 

• A corporation, a limited liability company (LLC), or was otherwise created  in the United States by filing a document with a secretary of state or any  similar office, or
• A foreign company that was registered to do business in any U.S. state or  Indian tribe

Not all entities are required to file. There are 23 exemptions, which include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.

Learn more about BOI exemptions.

Reporting requirements for tax-exempt entity exemption

In addition, there are 5 exceptions in which an individual, who would otherwise be a beneficial owner qualifies for an exception. In those cases, the business does not have to report that individual as a beneficial owner to FinCEN, such as a minor child, but you may instead report information about the parent or legal guardian of the minor child. 

When do you need to file a BOI?

If your business was created or registered to do business before January 1, 2024,  will have until January 1, 2025, to file its initial BOI report.  

Businesses created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.

Businesses created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective. 

Businesses that ceased to exist as a legal entity before January 1, 2024, meaning the business completed the process of formally and irrevocably dissolving, does not need to file.  

Due to Hurricane Milton, certain victims will receive an additional six months to submit their beneficial ownership information reports (including updates or corrections to prior reports) for 2024. To obtain this extension, the deadline to file an initial or updated BOI report must fall on or between October 4, 2024, and  January 2, 2025. It must have its principal place of business in an area designated both by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance and by the Internal Revenue Service  (IRS) as eligible for tax filing relief as a result of Hurricane Milton. 

With all Government filings, including the BOI, there are penalties.

A person who willfully violates the BOI reporting requirements, may be subject to civil penalties up to $500 per day that the violation continues. However, this civil penalty amount is adjusted annually for inflation. As of April 18, 2024, the penalty is $591.

A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to  $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information. 

It is very important for all businesses to make sure they follow this new law. If you have not filed, please make sure you do so and if you would like for us to handle the filing for you, please reach out to us.

Learn more about the BOI here is the Small Entity Compliance Guide.

For help with the BOI or any tax and accounting issues, please call us at (407) 559- 1047 or request an appointment.