1. What is the Corporate Transparency Act?
In 2021, Congress passed the Corporate Transparency Act, which aims to uncover ill-gotten gains from shell companies and fraudulent ownership structures. Congress hasn’t informed the public about this law, and now that task is falling on accountants, lawyers, and compliance professionals. Many business owners are not aware of this new federal requirement, putting them at risk of civil and criminal penalties.
The filings are being carried out through the Financial Crimes Enforcement Network (FinCEN), whose mission is to safeguard the financial system from illicit use, combat money laundering and its related crimes including terrorism, and promote national security through the strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.
2. What is a BOI Report?
The BOI report for your company will provide FinCEN with certain information – namely, its legal name and any DBA names it conducts business under, its address, jurisdiction of formation, and taxpayer identification number.
You will also have to provide FinCEN with personally identifiable information (that is, information from which an individual can be identified) for each beneficial owner. A beneficial owner is any individual who, directly or indirectly, exercises substantial control over a reporting company or who owns or controls at least 25 percent of a reporting company.
For each beneficial owner of your company, you’ll have to provide the individual’s legal name, birthdate, home address, an identifying number from a driver’s license, state ID, or passport, and an image of the document that the number is from. (Reporting companies formed on or after January 1, 2024 will also provide information about their company applicants.)
3. When are BOI Reports Due?
If you currently own a small business that has to file a BOI report (in which case your small business is called a “reporting company”), that report will have to be filed sometime between January 1, 2024 to January 1, 2025. Reporting companies formed on or after January 1, 2024 and before January 1, 2025 have to file within 90 days of receiving actual or public notice of their formation. Reporting companies formed on or after January 1, 2025 have to file within 30 days of receiving actual or public notice of their formation.
4. What Happens if I Need to Update My BOI Information?
It is critical to understand that BOI reporting is a requirement for the life of your business. Therefore, if any information reported about the company (or any of its beneficial owners changes, or there is a change in who the beneficial owners are), an updated report must be filed with FinCEN within 30 days of the change. If there was an inaccurate statement in the BOI report filed for your company, a corrected report must be filed within 30 days of when you became aware of, or should have become aware of, the inaccuracy.
5. Who Can See My BOI Report?
Access to BOI information is limited to certain authorized “requestors”, including federal law enforcement and national security agencies, state and local law enforcement agencies with a court order, the Treasury Department, financial institutions with the reporting company’s consent, and government agencies that oversee financial institutions. FinCEN is also required to implement protocols to safeguard beneficial ownership information, build a secure system to store the information and establish procedures to ensure that only authorized users can access the information and only for authorized purposes.
