What is the Beneficial Ownership Information Report?
New federal regulations went into effect earlier this year, of which many owners and drivers are still unaware.
Starting January 1st, 2024, new rules under the Corporate Transparency Act (CTA) require many LLCs and corporations to report their “beneficial ownership” information to the Financial Crimes Enforcement Network (FinCEN).
The Corporate Transparency Act was introduced as part of the Anti-Money Laundering Act in 2021 to help authorities detect money laundering, terrorism financing, and other financial crimes.
When Does the Beneficiary Ownership Information Report (BOIR) Go Into Effect?
Businesses need to meet the filing deadlines to avoid these penalties. Businesses that existed or were registered in the U.S. before January 1, 2024, have until January 1, 2025, to file their reports.
For businesses created in 2024 or later, they have 90 days from their formation date to submit their reports. This means they have 90 days from the date they receive notice that their business is officially registered.
Even if a business submits its report on time, it can still face penalties if the information is incorrect. It’s crucial that the report is accurate and includes all necessary details about the business, its formation, and its beneficial owners.
Which companies are impacted by BOIR?
This new legislation affects every business in America with a few exceptions. According to 31 CFR 1010.380(a)(1)(iii), “Any domestic reporting company created before January 1, 2024, and any entity that became a foreign reporting company before January 1, 2024 shall file a report not later than January 1, 2025.”
There are some exceptions to the rule. Companies like government agencies, banks, and credit unions don’t have to file a BOIR. While there are a few more types of companies that are also exempt, all other businesses in the United States must submit this report.
What is a Beneficial Owner According to FinCEN?
A beneficial owner is a person who has significant control or influence over a company. This can include senior officers, individuals who can appoint or remove company officials, key decision-makers, or anyone with substantial control within the LLC or corporation. A person is also considered a beneficial owner if they own at least 25% of the company’s shares, voting rights, or equity, or if they have the power to buy or sell these interests. There is no limit to the number of beneficial owners a company can have.
The new CTA rules allow FinCEN to collect beneficial ownership information (BOI) in a database that law enforcement, national security agencies, and financial institutions can access. However, the general public cannot access this information. The database will include names, addresses, dates of birth, and identification numbers of beneficial owners, helping authorities investigate any suspicious or illegal activities.
What are the Penalties for not Filing Your BOIR?
Each business must submit a BOIR, listing the people who control or own the business. If a beneficial owner deliberately fails to follow these rules, they could face serious consequences, including both criminal and civil penalties.
Not following these requirements can result in criminal charges, with penalties including up to two years in prison and/or a fine of up to $10,000. Additionally, civil penalties can reach $500 for each day the report is late.
FCCR can help you ensure that your report is correct, making the filing process easier and ensuring you meet federal requirements.
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