Beneficial Ownership Information (BOI) Reporting
The Corporate Transparency Act (CTA) requires certain types of U.S. and foreign entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury
- Beneficial Ownership Information (BOI) reporting is a regulatory requirement aimed at identifying the individuals who ultimately own or control a legal entity.
- It involves the disclosure of information regarding the beneficial owners of a company, including their identities, ownership stakes, and control over the entity.
- The purpose of BOI reporting is to enhance transparency, combat money laundering, and prevent illicit financial activities by identifying the true individuals behind corporate entities.
- BOI reporting requirements vary by jurisdiction, but they generally apply to companies, trusts, and other legal entities, with specific thresholds for ownership percentage triggering reporting obligations. Certain types of companies as well as inactive companies may be exempt.
- Compliance with BOI reporting obligations is essential for businesses to ensure adherence to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations and to avoid potential penalties for non-compliance.
- Penalties can include:
The civil penalty for a violation is a minimum $591 per day
Criminal penalties include fines of $10,000
Criminal penalties may include imprisonment of up to two years
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Beneficial Ownership Information (BOI) Reporting Requirements
Businesses formed BEFORE January 1, 2024 will have until January 1, 2025 to file their initial report
Businesses formed AFTER January 1, 2024 must file their initial report within 90 days of formation
A reporting company must report:
- Legal name
- Any trade, doing business as, or trading as names
- The current street address of its U.S. place of business, jurisdiction of formation or registration
- IRS taxpayer identification number
- Type of BOI filing (i.e., initial report, a correction of a prior report, or an update to a prior report)
In addition, for each individual who is a beneficial owner or company applicant, the reporting company must report:
- Individual’s name
- Date of birth
- Address
- Unique identifying number from an acceptable identification document (e.g., driver’s license, passport, etc.)
- Name of the state or jurisdiction that issued the identification document
A beneficial owner is an individual who either directly or indirectly (1) exercises substantial control over the reporting company (e.g., a senior officer or key decision-maker), or (2) owns or controls at least 25% of the reporting company’s ownership interests. A corporate entity owner is “looked through” to its ultimate owners for purposes of determining the 25% ownership test.
Exemptions from BOI Reporting
There are 23 distinct types of entities exempt from the obligations to report beneficial ownership information. These include publicly traded companies meeting specific criteria, numerous nonprofits, and certain large operating companies.
The most common exemption is the Large Operating Company Exemption, which necessitates that a business has both more than 20 full-time employees and $5 million or more in sales on its last business tax return to qualify.
The list below providing issuer required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934.
- Company that exerts governmental authority on behalf of a State or Tribe
- Registered Bank
- Registered Credit union
- Registered depository institution holding company
- Registered money services business
- SEC-registered broker or dealer in securities
- SEC registered securities exchange or clearing agency
- Company registered under the Commodity Exchange Act
- SEC-registered investment company or investment adviser
- SEC-registered venture capital fund adviser
- Registered Insurance company
- State-licensed insurance producer
- Commodity Exchange Act registered entity
- Registered accounting firm
- Public utility company
- Financial market utility company designated by the Financial Stability Oversight Council
- Pooled investment vehicle operated by an SEC registered person
- Tax-exempt entity
- Entity that exclusively exists to provide financial assistance or governance to a tax-exempt entity
- Entity 100% owned by an exempt entity
- Inactive entity created before 1/1/2020 that holds no assets, is not engaged in any business, has no foreign owners, and has not sent or received money or changed ownership in the prior 12 months.
- Large operating company as described above
Before determining your company’s exemption status, carefully review the criteria associated with each exemption.
We make it easy and safe for you and your clients to file and avoid fines.
With over 75 years of complex governmental filing experience, our partner has an experienced team of financial experts and software developers that have brought their know-how to BOI reporting.
BOI filing services are part of our Risk Reduction Bundle offered through our sister company Stellar Marketing Services.