What is the Beneficial Ownership Information report?

What is the Beneficial Ownership Information report?

The BOI report is a form that business owners are required to fill out and submit to the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Treasury Department. It contains personal identifiable information about owners and is required for a broad category of businesses in the United States.

Business owners are required to fill out the BOI report by January 1, 2025, or within a certain number of days of the business or entity being formed. Owners who fail to file by the deadline can face fines and legal penalties.

As of December 16, 2024, the Corporate Transparency Act and the BOI reporting requirement have been put on hold following a court injunction from the U.S. District Court for the Eastern District of Texas. Business owners are encouraged by the federal government to file their BOI report as the case develops.

Why is the Beneficial Ownership Information report important?

The BOI report was introduced as part of the Corporate Transparency Act, which was passed by Congress in 2021. The aim of the Corporate Transparency Act is to reduce criminal activity done by businesses through creating a centralized database of businesses and business owners.

Having information on the ownership of businesses can allow law enforcement agencies to track criminal activity conducted through businesses, expose shell companies and catch fraud efficiently, according to FinCEN.

Who can access Beneficial Ownership Information?

According to FinCEN, BOI is stored in a secure, non-public database and only accessed by government officials with authorization to view the data. This includes:

• Federal law enforcement officials and agencies
• State, local, and Tribal law enforcement officials and agencies with an authorizing court order
• Treasury officials
• Foreign law enforcement and legal entities approved by the U.S. federal government to access BOI in matters of law, intelligence and security
• Financial institutions that have due diligence requirements to know their customers’ BOI information, as required by law
• Federal agents, regulators and agencies who supervise financial institutions with access to BOI information

Do I need to file a Beneficial Ownership Information report for my business?

FinCEN requires BOI filing for corporations, limited liability companies or any entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe. If you are the beneficial owner of one of these business entities, then you need to file a BOI report.

Who are beneficial owners?

The BOI report must contain information on what FinCEN refers to as a “beneficial owner,” which is an owner of the business that has substantial control over the business, or who owns or controls at least 25 percent of the business’s ownership interests.

Substantial control is defined as having the power to make direct decisions over the business’ direction, finances and overall structure, such as mergers, budgets, major purchases and otherwise.

As such, beneficial ownership can include senior management and official roles such as:

• Senior officers and executives, such as the company president, chief financial officer, chief executive officer, chief operating officer or other C-suite roles.
• Anyone who can appoint, remove or terminate certain officers or directors from the company or business
• Anyone who is considered an important decision-maker for the business.

Beneficial owners also must be individuals – they cannot be trusts or companies represented by legal counsel in their stead.

Beneficial Ownership Information reporting requirements

Beneficial ownership requires the beneficial owners to submit their personal information in the BOI report. There are exemptions to the BOI for certain business types and industries.

You DO need to file a Beneficial Ownership report if your business is:

• A corporation, LLC, LLC partnership or an entity that requires filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.
• Currently active.
• Not in an exempt category.

You do NOT need to file a BOI report if your business is:

• Not a corporation, LLC or LLC partnership.
• Owned by a sole proprietor.
• Part of the exempt categories of businesses, which include banks, credit unions, insurance companies, accounting firms, tax-exempt entities, money services, businesses, and investment firms.
• Inactive.

How to file a Beneficial Ownership Information report

Business owners can file the BOI report online via FinCEN’s registration page, either by filling out an online form or by digitally filling out a PDF and uploading it to the site. Currently, the only way to submit the report is digitally and FinCEN is not currently accepting physical forms by mail or otherwise.

For each beneficial owner of the company, FinCEN requires they provide:

• Their legal name
• Date of birth
• Residential address
• Identifying documents (such as a state-issued license or passport)

The BOI report also requires tax reporting information, the FinCEN ID and the legal address of the filing business.

What happens if I don’t file a Beneficial Ownership Information report?

Failure to file the BOI report by the deadline can result in daily fines of $591 (as of April 28, 2024, adjusted for inflation.) Willfully violating requirements, or falsifying information on the BOI report, can result in two years of prison and up to $10,000 in fines.

What to know about the Corporate Transparency Act injunction

As of Dec. 16, 2024, a temporary injunction from the U.S. District Court for the Eastern District of Texas in the case Texas Top Cop Shop, Inc. vs. Garland, with the argument that the Corporate Transparency Act and associated requirements are unconstitutional, and violate business owners’ right to privacy and free speech.

A final court ruling is expected by Dec. 27, 2024. In the meantime, business owners can file their BOI report while the legal process continues.

Bottom line

The Beneficial Ownership Information report is required for certain types of businesses in the United States, and includes identifying information on business owners and officers with a direct stake in the company. Failure to file by the Jan 1, 2025 deadline, pending ongoing litigation, can result in civil fines and penalties. Qualifying businesses can file their report online at the FinCEN website.

Frequently asked questions

What is the Beneficial Ownership Information reporting deadline?

• For businesses created before January 1, 2024, the deadline is January 1, 2024.
• For businesses created during the year of 2024, the filing deadline is 90 days after receiving notice of creation or registration.
• For businesses created on or after January 1, 2025, the filing deadline is 30 days after receiving notice of creation or registration.

Should I file the Beneficial Ownership Information report with the injunction?

While it isn’t required, the federal government encourages businesses to file their BOI report while the case goes through the legal process.

Do I need a lawyer or CPA to file my business’s BOI report?

You don’t need an accountant or business lawyer to file a BOI report; however, you can choose to have someone file it on your behalf as long as all the required information is included.