New BOI Reporting Requirements

Millions of U.S. businesses must now comply with Beneficial Ownership Information (BOI) reporting rules, with the deadline set for January 1, 2025. Under the Corporate Transparency Act, businesses are required to submit BOI reports to the Financial Crimes Enforcement Network (FinCEN). The goal is to increase transparency and prevent financial crimes, such as money laundering and terrorism financing. As of August 2024, only 2.7 million of the 32.6 million businesses required to report have done so. These rules mandate businesses to provide detailed ownership information to the federal government. As the deadline approaches, business owners need to understand who must file and what information is required. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.

Understanding BOI Reporting Requirements

Certain businesses, known as reporting companies, are now required to disclose their beneficial owners — individuals who either own at least 25% of the company or hold substantial control over it. Substantial control can include senior officers, decision-makers, or those who have the authority to appoint or remove officers. Reporting companies fall into two categories:

• Domestic reporting companies are corporations, limited liability companies (LLCs), and other entities formed by filing a document with a secretary of state or a similar office in the U.S.
• Foreign reporting companies are entities, including corporations and LLCs, formed under the laws of a foreign country that have registered to do business in the U.S. by filing a document with a secretary of state or a similar office.

However, not all entities are required to file. There are 23 categories of exempt entities, including publicly traded companies that meet specific regulatory requirements, many nonprofit organizations, and certain large operating companies that satisfy particular revenue and employee thresholds.

To comply with the requirement, businesses must submit details for each beneficial owner, including full legal name, date of birth, residential address, and a unique identification number from a government-issued document (such as a passport or driver’s license). This information helps provide transparency by identifying individuals who hold significant ownership or control within a company.

Importantly, the data provided is not publicly accessible. Access to BOI data is restricted to specific entities, such as regulatory agencies, law enforcement, and financial institutions, and only under conditions related to compliance and anti-money laundering regulations. Businesses must submit their reports through FinCEN’s secure e-filing system, for a streamlined and protected submission process.

If beneficial ownership changes after filing, the business is responsible for updating the report within 30 days to stay compliant. For those owning multiple companies, separate BOI reports will need to be submitted for each entity.

Key Deadlines for Filing

Meeting the BOI reporting deadlines is key to staying compliant and avoiding penalties. These deadlines depend on when a business was formed or registered. Below is a breakdown of the key filing deadlines that businesses must follow:

• Initial Filing Deadline for All Companies: January 1, 2025, is the deadline for all reporting companies to file the initial BOI report.
• New Companies Created Between January 1, 2024, and January 1, 2025: These companies have 90 calendar days from the notice of their creation or registration to file their BOI report. This 90-day period begins either when the company receives actual notice of its creation or when public notice is issued, whichever occurs first.
• Companies Created on or After January 1, 2025: Companies created after this date will have only 30 calendar days from the receipt of public or actual notice of their creation to file their BOI reports.

Consequences for Non-Compliance

Failing to comply with BOI reporting requirements can result in significant penalties. Businesses that miss the filing deadline or provide inaccurate information may face daily civil fines until they comply. For those that knowingly submit false information, criminal penalties may also apply. However, businesses that make honest mistakes may be able to correct the errors without facing harsh penalties, especially if the corrections are made quickly.

Scams Targeting Businesses

The introduction of BOI reporting has unfortunately led to fraudulent schemes targeting those unfamiliar with the process. FinCEN has issued several warnings and management should stay vigilant. Key points to keep in mind include:

• No Payment Required: FinCEN will never send a request for payment or ask for money in relation to the BOI filing process.
• Avoid Suspicious Links and QR Codes: Be cautious of emails or letters asking recipients to click on URLs or scan QR codes. These are common tactics in fraudulent schemes.
• Fraudulent Forms and Notices: Any letter or email referencing a “Form 4022” or an “Important Compliance Notice” is a scam. FinCEN does not use these forms, and any correspondence mentioning them should be disregarded.
• Bogus Government Departments: Scammers may reference fake entities, such as a “U.S. Business Regulations Department.” There is no legitimate government agency by that name.

If suspicious communication is received, management should not click on any links, send money, or provide sensitive information. Instead, the legitimacy of the request should be verified directly with FinCEN or through a trusted professional.

Contact Us 

Given the approaching deadline, businesses will want to act promptly to ensure compliance and avoid penalties. Gathering the necessary information can take time, especially for companies with more complex ownership structures. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.