The Beneficial Ownership Information Report (BOIR) is a new requirement for all businesses to complete under the Corporate Transparency Act and is overseen by the Financial Crimes Enforcement Network (FinCEN). The deadline for business owners to fill this out is the end of this year, and not filling it out could result in penalties and significant fines. Do you know what you need to do for your BOIR? Learn more about The Beneficial Ownership Information Report (BOIR) and what you need to know below, which is from the FinCEN arm of the US Government.
What Is the new BOIR?
The BOIR plays a crucial role in increasing transparency around business ownership and preventing criminal misuse of companies. This new requirement has been designed to increase transparency in business ownership and will work to combat financial crimes and improve accountability. This will help the government combat illicit activities such as money laundering, tax evasion and terrorism financing. The government will also be able to enhance enforcement of financial regulations and safeguard the financial system from abuse. The report itself is used to identify the individuals who own or control a business.
Some of the key points about the BOIR include:
- This is a new required report that must be submitted.
- It applies to most U.S. businesses.
- The deadline to file is January 1st, 20250
- Failure to file can result in penalties of up to $500 per day.
Who Must File by the Upcoming Deadline?
The new BOIR filing requirement is mandatory for:
- Corporations
- Limited Liability Companies (LLC’s)
- Other similar entities that were created or registered in the U.S. before January 1st, 2024.
It should also be noted that businesses must report detailed information about their beneficial owners, which are individuals who meet one of both of the following criteria:
- Own 25% or more of the company
- Exercise substantial control over the company
What exactly is substantial control? It can be someone who is a senior officer, someone with authority to appoint or remove certain officers or a majority of directors of the business, someone who is an important decision-maker in the business or someone who may have influence over important decisions.
Businesses that registered on or after the January 1st, 2024 date have a different reporting timeline. They must file their BOIR within 30 DAYS of registration.
Who Is Exempt from Filing a BOI Report?
Some businesses and organizations are not required to file a BOI report. These exemptions include:
- Publicly traded companies registered with the Securities and Exchange Commission (SEC).
- Certain large operating companies that meet specific requirements
- Nonprofits, except ones that have their non-profit status pending with the IRS.
- Inactive entities that were established on or before 1/1/20, but are not in active business.
- Small businesses that are members of the National Small Business Association (NSBA) as of 3/1/24. This is the date a federal court ruled in favor of NSBA’s constitutional challenge to CTA.
- Government entities and banks are also exempt from filing a BOI report
What Are The Penalties for Not Filing a BOI Report?
Know that a failure to file the BOIR or providing inaccurate information can result in severe penalties, which are as follows:
- Civil Penalties of fines up to $500 per day each day the report is late or incorrect.
- Criminal Penalties – If there is a willful failure to file a BOIR, or you provide false or fraudulent information, you can face severe criminal penalties including:
- Fines of up to $10,000
- Imprisonment of up to two years for willfully providing false information or deliberately failing to submit the report
- Penalties for “willfull misrepresentation”:
- If a business or individual knowingly submits false information, it could result in both civil and criminal consequences. This includes intentionally hiding beneficial owners or providing misleading details.
If a business realizes they’ve submitted incorrect information, it is possible to correct the BOIR. They must fix the report within 30 days of discovering the mistake in order to avoid penalties. Failing to amend the incorrect data could trigger additional penalties.
Therefore, it’s extremely important you submit the BOIR on time, with accurate and complete information about all beneficial owners. You may also need to regularly update your BOIR if there are changes in ownership or control within 30 days of the change. Make sure you stay on top of your filing obligations!
How Do You File the Beneficial Ownership Information Report (BOIR)?
You can submit the file electronically via the FinCEN Website HERE. The dedicated online portal will have the online form that you can complete by entering all of the required information.
From here, you will simply review all of the information and submit the form. You will also want to keep a record of your submission for your own reference. Remember, it’s your responsibility to stay compliant and keeping your beneficial ownership information up-to-date.
Filing is simple, secure and free of charge and you can always take a look at the FAQ section of the website to help guide the process.
Make sure you have filed your BOIR by January 1st if it is a requirement for your business. Even better, create a procedure where you keep all personal information organized, secure and current. This will help to make the process easier as time passes and ensure you stay compliant.
If you need help completing your BOI report, please contact us! We’ve been helping some of our business-owner clients get their information completed and submitted, and we’d be happy to help you, as well!