The information below is pertinent to our clients who are existing business owners. Please take a moment to read all the information.
2024 Department of Treasury News:
There is a new federal Beneficial Ownership Information (BOI) Reporting Rule from the Financial Crimes Enforcement Network (FinCEN) beginning 1/1/2024 for most corporations, limited liability companies, and limited partnerships and on certain other business entities. A BOI report must be filed by 12/31/2024.
Some background on the new rule – In 2021, Congress passed the Corporate Transparency Act (CTA) on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement with the FinCEN to help law enforcement agencies prevent the use of anonymous shell companies for laundering money, tax evasion, terrorism, and other illegal purposes. The BOI report will not be publicly available.
A beneficial owner is an individual who owns or controls at least 25 percent of a company or has substantial control over the company, and a company applicant is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company.
Note that there are 23 types of entities exempt from the beneficial ownership information reporting requirements. These entities include sole proprietors, general partnerships, publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.
The initial BOI report filing does not expire, and you don’t need to renew it. But you have an ongoing duty to keep the BOI report up to date by reporting any changes to FinCEN within 30 days.
As the CTA is not a part of the tax code, the assessment and application of many of the requirements set forth in the regulations, including but not limited to the determination of beneficial ownership interest, may necessitate the need for legal guidance and direction. As such, since we are not attorneys, our firm is not able to provide you with any legal determination as to whether an exemption applies to the nature of your entity or whether legal relationships constitute beneficial ownership.
Note that penalties for willfully violating the CTA’s reporting requirements include (1) civil penalties of up to $500 per day that a violation is not remedied, (2) a criminal fine of up to $10,000, and/or (3) imprisonment of up to two years.
Although the filing of the Beneficial Ownership Information report is not part of the annual tax filing process, our office will be available to assist with the filing of the report at our normal hourly rate.
For additional information visit: www.fincen.gov/boi