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If you own or control a business entity, there's a new federal filing requirement that went into effect on January 1, 2024. Moreover, there are substantial penalties for not meeting the new filing requirements.
The CTA necessitates filing two reports simultaneously with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN):
1) Beneficial Owner Information Report (BOI report)
2) Company Applicant Information Report
FREE BOI INFORMATION AND RESOURCES
The U.S. Treasury Department's FinCEN BOI website provides a wealth of resources on the requirements, as well as how to prepare and file your return, including the five-minute demo video below on how to file a Beneficial Ownership Information (BOI) Report online.
You'll also find an extensive Beneficial Ownership Information FAQ on the FinCEN BOI website, which answers most common questions, here: https://www.fincen.gov/boi-faqs
Here are links to additional information and PDFs from FinCEN that further explain the process and compliance requirements:
- Introduction to BOI Reporting
- Small Entity Compliance Guide
- Beneficial Ownership Information Report (BOIR) Filing Instructions
- PDF BOIR Filing Method: Quick Reference Guide
- PDF BOIR Filing Method: Step-by-Step Instructions
- Online BOIR Filing Method: Quick Reference Guide
- Online BOIR Filing Method: Step-by-Step Instructions
BENEFICIAL OWNERSHIP INTEREST OVERVIEW
Who Must Report?
If you own or control 25% or more of a Corporation (C-Corp or S-Corp), an LLC including a single-member LLC or an LLC formed for a rental property, a Limited Partnership (in most states), or a Limited Liability Partnership, or Family Trust, you are required to file.
When Are Reports Due?
New businesses formed on or after January 1, 2024 must report within 90 days of business formation. Existing reporting companies will have until December 31, 2024. However, reports should be filed at least three months prior to assure there is time to submit a corrective report (in the event one should be required).
Penalties for Non-Compliance:
Keep in mind, these new reporting requirements carry severe penalties for non-compliance. Civil penalties can reach up to $500 for each day of violation (up to $10,000 maximum). Moreover, there are potential criminal penalties, including imprisonment for up to two years for willful provision of false or fraudulent beneficial ownership information or failure to report complete or updated information to FinCEN. Again, a corrective report submitted within 90 days can mitigate civil or criminal liability. Claremont Management is encouraging all of our clients to file early, so you will have ample time to file a corrected report, if required.
Reporting Future Changes:
Just keep in mind, companies must update their Beneficial Ownership Information (BOI) report within 30 calendar days of any changes to beneficial ownership information. This includes changes to the company or its beneficial owners, such as a change in name, ownership, or contact information. It also includes changes to a beneficial owner's personal information, such as their home address, legal name, or driver's license number.
What Businesses Are Exempt?
Most businesses in the United States will be required to file, however there are some exemptions, including: Sole Proprietorships, General Partnerships (except in Delaware), most Business Trusts, and large operating companies with 20 or more employees, or companies in heavily regulated industries (such as Banking, Insurance, Healthcare, etc.).
FINCEN BOI DEADLINES
EXISTING BUSINESS ENTITIES: If your entity (Partnership, Corporation or LLC) was in existence before 12/31/23, you will have until 12/31/24 to file your report in most instances.
NEW BUSINESSES: If you are creating a new entity after 01/01/24. you will have 90 days to file your report.
QUESTIONS?
If you're a Claremont Management client and still have questions, please reach out to John or Maria at (847) 398-1275.