Deadline for Filing Initial BOI Report for Non-Exempt Entities is Dec. 31, 2024 – Do It Today!

Posted by: Karen Booher on September 16th, 2024

The Corporate Transparency Act (“CTA”) became effective as of January 1, 2024. The CTA requires all existing and newly formed entities that are not otherwise exempt (called “reporting companies”) to file a Beneficial Ownership Information Report (“BOI Report”) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).

What is the Background and Purpose of the CTA?

In 2021, Congress enacted the CTA, which establishes uniform BOI reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States.

The CTA is designed to help the U.S. government collect information necessary to prevent bad actors from using the U.S. financial system to facilitate money laundering, tax evasion, human and drug trafficking, and other illicit activities.

Who Is Required to File an Initial BOI Report?

Unless the entity meets one of 23 exemptions described below:

• All entities that were formed prior to January 1, 2024 must file an initial BOI Report by no later than December 31, 2024.
• All entities that were formed on or after January 1, 2024 must file an initial BOI Report no later than 90 days after the formation date of the new entity.
• All entities formed on or after January 1, 2025 must file a BOI Report within 30 days of formation.
• Changes: All entities (regardless of date of formation) must file any updates or changes to the initial BOI Report, including personal information of beneficial owners, within 30 days of such change.
• You can file the initial BOI Report, or updates/changes, at https://www.fincen.gov/boi. There is no fee to file BOI reports.

What Types of Entities Are Exempt From Reporting?

There are 23 exemptions for certain types of entities, which can be found at: https://www.fincen.gov/boi-faqs#C_2. These exemptions are:

Exemption No.	Exemption Short Title
1	Securities reporting issuer
2	Governmental authority
3	Bank
4	Credit union
5	Depository institution holding company
6	Money services business
7	Broker or dealer in securities
8	Securities exchange or clearing agency
9	Other Exchange Act registered entity
10	Investment company or investment adviser
11	Venture capital fund adviser
12	Insurance company
13	State-licensed insurance producer
14	Commodity Exchange Act registered entity
15	Accounting firm
16	Public utility
17	Financial market utility
18	Pooled investment vehicle
19	Tax-exempt entity
20	Entity assisting a tax-exempt entity
21	Large operating company
22	Subsidiary of certain exempt entities
23	Inactive entity

Perhaps the most common exemption to BOI reporting is #21, the “large operating company” exemption. Generally, a company meets this exemption if it has at least 20 full-time employees (not on a consolidated basis), more than $5 million in gross receipts or sales, and an operating presence at a physical office within the United States.

What Information Needs to be Disclosed on the Initial BOI Report?

The initial BOI Report requires disclosure of the entity’s legal name, trade names, address, EIN, jurisdiction of formation, and the name and personal information (including a copy of a government-issued ID) of its beneficial owners. “Beneficial owners” include all individuals who, directly or indirectly, own or control at least 25% of the ownership interests of the reporting company, or persons that exercise substantial control over a reporting company.

Penalties for Failing to File BOI Reports with FinCEN

A person who willfully fails to comply with BOI reporting may be subject to civil penalties of $500 per day and criminal penalties including a $10,000 fine and/or up to two years of imprisonment.

QUESTIONS? Reach out to your attorney for assistance in complying with these filings.

This blog is meant to provide general information about CTA and BOI Reporting and is not to be considered legal advice.

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Sources:

1. https://www.fincen.gov/boi
2. Rumler Tarbox Lyden, 8/7/2024 email from Paul E. Rumler.
3. CliftonLarsonAllen, www.claconnect.com.