Beneficial Ownership Information
Congress enacted the Corporate Transparency Act (CTA) on Jan. 1, 2021, as part of the 2021 National Defense Authorization Act. Beginning Jan. 1, 2024, most small companies (unless specifically exempted) must file new beneficial ownership information (BOI) forms with the Financial Crimes Enforcement Network (FinCEN). Generally, this will impact C corporations, S corporations, limited liability companies (LLC’s), partnerships and any type of state-law entity that is required to file with a secretary of state or similar office.
Filers generally must report the identity of their owners upon the formation of the company and on every occasion that such information changes. Impacted companies existing prior to Jan. 1, 2024, have until Jan. 1, 2025, to file initial reports. New companies created during 2024 have 90 days to file, new companies created after 2024 have 30 days to file, and companies with ownership changes have 30 days to update their information.
As the reach of the BOI reporting requirements is limited to “small businesses,” it will affect nearly every one of our clients who have their own business. There is no filing fee for BOI reporting; however, failure to comply with the BOI reporting requirements is subject to penalties ranging from $500 to $10,000, and potential imprisonment up to two years.
The purpose of BOI reporting under the CTA is to establish a database of information that will be “useful in combatting illicit finance and the abuse of shell and front companies by criminals, corrupt officials and other bad actors.” This purpose is unrelated to tax compliance obligations or with interpretations of the Internal Revenue Code and is administered directly by FinCEN, not the IRS.
We believe that the purpose and administration of BOI reporting is outside the scope of services that we are authorized to provide to you. Consequently, we cannot assist you with your BOI reporting responsibilities, and we cannot advise on the determination of your BOI reporting responsibilities. We regret any inconvenience that this may cause, as we remain dedicated to serve your business needs and appreciate the burdens of obtaining an alternative service provider. We recommend consulting with your legal counsel for assistance with determining and facilitating any BOI reporting requirements. In the meantime, the following information from FinCEN may be helpful:
Small Entity Compliance Guide: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf
Beneficial Ownership Information Reporting FAQs: https://www.fincen.gov/boi-faqs
As the Jan. 1, 2024, launch date quickly approaches for BOI reporting under the CTA, unless you intend to address the reporting responsibility internally, it is very important that you contact your legal counsel as soon as possible in order to ensure timely compliance.
Filers generally must report the identity of their owners upon the formation of the company and on every occasion that such information changes. Impacted companies existing prior to Jan. 1, 2024, have until Jan. 1, 2025, to file initial reports. New companies created during 2024 have 90 days to file, new companies created after 2024 have 30 days to file, and companies with ownership changes have 30 days to update their information.
As the reach of the BOI reporting requirements is limited to “small businesses,” it will affect nearly every one of our clients who have their own business. There is no filing fee for BOI reporting; however, failure to comply with the BOI reporting requirements is subject to penalties ranging from $500 to $10,000, and potential imprisonment up to two years.
The purpose of BOI reporting under the CTA is to establish a database of information that will be “useful in combatting illicit finance and the abuse of shell and front companies by criminals, corrupt officials and other bad actors.” This purpose is unrelated to tax compliance obligations or with interpretations of the Internal Revenue Code and is administered directly by FinCEN, not the IRS.
We believe that the purpose and administration of BOI reporting is outside the scope of services that we are authorized to provide to you. Consequently, we cannot assist you with your BOI reporting responsibilities, and we cannot advise on the determination of your BOI reporting responsibilities. We regret any inconvenience that this may cause, as we remain dedicated to serve your business needs and appreciate the burdens of obtaining an alternative service provider. We recommend consulting with your legal counsel for assistance with determining and facilitating any BOI reporting requirements. In the meantime, the following information from FinCEN may be helpful:
Small Entity Compliance Guide: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf
Beneficial Ownership Information Reporting FAQs: https://www.fincen.gov/boi-faqs
As the Jan. 1, 2024, launch date quickly approaches for BOI reporting under the CTA, unless you intend to address the reporting responsibility internally, it is very important that you contact your legal counsel as soon as possible in order to ensure timely compliance.