FinCEN Beneficial Ownership Reports Due Before the End of the Year
By: Michael Bayes, Jessica Furst Johnson, Timothy E. Kronquist, and Andrew D. Watkins
Under new rules that went into effect in 2024, certain business entities are now required to file Beneficial Ownership Information (“BOI”) Reports with the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury. The new reporting rule applies to corporations, LLCs, and any other entity that is created by filing a formation document that establishes the entity’s legal existence with a Secretary of State or similar state official. The new law also applies to entities created under foreign law that register to do business in any state or U.S. territory. Numerous exemptions apply. Tax-exempt non-profit entities, political organizations, and larger companies are exempt from this filing requirement and do not need to take any action.
If your company is required to file, the BOI report must disclose information about the individuals exercising “substantial control” over the company as well as any individual who owns or controls 25% or more of the company. BOI Reports are not available to the public, but information can be shared with U.S. law enforcement agencies and, with court approval, certain other enforcement agencies.
Who Is Required to File?
The new BOI reporting requirements apply to all U.S. entities (including corporations and limited liability companies) and foreign entities that are registered to do business in any state. However, there are 23 exemptions from these filing requirements (a full list of all exemptions can be found in the BOI Compliance Guide).
Who Is Exempt from Filing?
Most significantly, tax-exempt, nonprofit organizations are not required to file a BOI Report. This includes any organization that is exempt from federal income tax under section 501(c) of the Internal Revenue Code—including section 501(c)(3), 501(c)(4), and 501(c)(6) organizations. Political organizations that are tax-exempt under section 527 also are not required to file. This includes all political campaign committees, PACs, Super PACs, and political party committees.
Additionally, large operating companies are exempt from the reporting requirement if they (1) employee more than 20 full time employees in the United States, (2) have a physical office in the United States, and (3) report more than $5 million in gross receipts from U.S. sources on their IRS tax return.
When Is the BOI Report Due?
For reporting companies that were created before January 1, 2024, a BOI Report is due by December 31, 2024.
Any reporting company that was created during 2024 must file a BOI Report within 90 calendar days of creation.
Starting January 1, 2025, new reporting companies will be required to file a BOI Report within 30 calendar days from their creation. Additionally, a reporting company is required to update its BOI Report within 30 calendar days of any changes in the information reported.
What Do I Need to Do?
If you believe that the new BOI reporting requirements apply to your company, you must file a BOI Report using the online filing system before the due date. Penalties for not complying with these requirements include up to $10,000 in fines and up to two years in jail.
We are happy to provide you with more information about the reporting requirements and to address any questions you may have. Additional information can also be found in the BOI Compliance Guide produced by FinCEN as well as the Frequently Asked Questions posted on its website.
Remember, tax-exempt section 501(c) organizations (including section 501(c)(3), 501(c)(4), and 501(c)(6) organizations) and section 527 political organizations (including candidate committees, party committees, PACs, and Super PACs) are not required to file a BOI Report and do not need to take any action.
