FinCEN announced that the beneficial ownership information (BOI) filing mandate is now due March 21, 2025. This new due date applies to the vast majority of reporting companies to file an initial, updated, or corrected BOI report, including those entities formed prior to January 1, 2024. Entities formed in 2025 must file no later than March 21, 2025, or 30 days from the date of formation.
FinCEN indicated that, over the next 30 days, it will “assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.” FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce the burden for lower-risk entities, including many US small businesses.
What is the Corporate Transparency?
The Corporate Transparency Act (signed into law on January 1, 2021) expanded anti-money laundering laws and created new reporting requirements for certain companies doing business in the US. Beginning in 2024, many small businesses are required to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) in an effort to create a national database for use by national security and law enforcement agencies to prevent the use of shell companies for criminal activity.
Who Must File
A company is considered a reporting company if a document was filed with the secretary of state (SOS) or similar office to create or register the entity. Corporations (including S corporations), LLCs, and other entities formed through the SOS are subject to the reporting requirements. But, because sole proprietorships, trusts, and general partnerships do not require the filing of a formal document with the SOS, they generally are not considered a reporting company and will not have a filing requirement.
Some companies are exempt from reporting. For the full listing of exemptions, see the following link: https://www.fincen.gov/boi-faqs#C_2.
Of particular interest to you may be the exemption for large operating companies. A large operating company is any entity with (a) more than 20 full-time US employees, (b) an operating presence at a physical office within the US, and (c) more than $5,000,000 of US-sourced gross receipts reported on its prior year federal income tax return. If you meet these qualifications, you are not subject to the new reporting requirements.
Important to note is that the large operating company exemption requires that the entity itself employ more than 20 full-time employees in the United States and does not permit consolidation of this employee count across multiple entities. This may create filing requirements for companies that share employees.
Additionally, although there exist a subsidiary exemption, for those 100% owned entities, the holding company would have to qualify under the large operating company exemption. For example:
- If a holding company meets the large operating company exemption noted above, then the subsidiaries it owns wholly (100%) would not be subject to the filing requirement.
- If the holding company does not meet the large operating company exemption, perhaps because the holding company itself was not the employer on record, then all the subsidiaries owned by the holding company would have to individually assess their filing requirements and if they qualify for an exemption
How to File
BOI reports must be filed electronically. There are two methods available to submit reports on FinCEN’s e-filing portal, available at https://boiefiling.fincen.gov/:
- By filling out a web-based version of the form and submitting it online, OR
- By uploading a completed PDF version of the BOI report.
The person who submits the BOI report will need to provide their name and email address to FinCEN. There is no fee for filing the report.
Important Filing Dates
For existing reporting companies created or registered before 2024, the initial report is due by January 1, 2025.
For reporting companies created or registered in 2024, the initial report is due 90 days after the entity’s creation or registration.
For reporting companies created or registered after 2024, the initial report is due 30 days after the entity’s creation or registration.
If there is a change to previously reported information about the reporting company or its beneficial owners, an updated report must be filed within 30 days of the change. So, it is imperative that your company implement a system to identify reportable changes and file an updated report with FinCEN in a timely manner. The penalties for willfully failing to file both initial and updated reports are steep-$500 per day that the report is late, up to $10,000 and imprisonment for up to two years.
What Information Must be Provided
Beneficial ownership information (BOI) must be reported for the reporting company’s beneficial owners and (for entities formed or registered after 2023) company applicants. BOI includes an individual’s full legal name, date of birth, street address and a unique ID number. The unique ID number can be from a non-expired US passport, state driver’s license, or other government-issued ID card.
Two groups of individuals are considered beneficial owners of a reporting company:
- Any individual who directly or indirectly owns or controls at least 25% of the ownership interests of the reporting company, OR
- Any individual who exercises substantial control over the reporting company
Individuals with substantial control are those with substantial influence over important decisions about a reporting company’s business, finances, and structure. Senior officers (president, CFO, general counsel, CEO, COO, and any other officer who performs a similar function) are automatically deemed to have substantial control, as are individuals with the authority to appoint or remove senior officers and board members. There is no requirement that these individuals have actual ownership in the company to be a considered a beneficial owner for reporting purposes.
Additional Resources
FinCEN also has a Small Entity Compliance Guide and frequently asked questions to help guide businesses through the reporting requirements. These are available at https://www.fincen.gov/boi/small-business-resources.
You can find additional information about the BOI deadline extension here: www.fincen.gov/sites/default/files/shared/FinCEN-BOI-Notice-Deadline-Extension-508FINAL.pdf