Beneficial Ownership Information Reports
BOI Reports to FinCEN
Current Status: BOI has been put on hold by a federal appeals court, so there is no longer a need to register. For additional details, refer to the FinCEN news release.
Background
The Corporate Transparency Act ("CTA") was enacted January 1, 2021, as part of the National Defense Authorization Act. It represents the most significant reform of the Bank Secrecy Act and anti-money laundering rules since the U.S. Patriot Act. The law requires certain entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a Treasury Department bureau.
Subject Entities
Reporting Companies include corporations, LLCs, and entities created through Secretary of State filings. This also applies to foreign companies registering to conduct business in the U.S.
Large Operating Company Exception requires all of the following:
- More than 20 full-time U.S. employees
- Gross revenue exceeding $5 million on the prior year's tax return
- A physical office presence in the U.S.
Beneficial Owner Definition
A beneficial owner is any individual who directly or indirectly exercises substantial control, or owns at least 25% of ownership interests.
Substantial control includes individuals who:
- Serve as senior officers
- Have authority over officer appointment/removal or hold majority board seats
- Direct important company decisions
Reporting Deadlines (as originally enacted)
- Existing companies (formed/registered before January 1, 2024): report by January 1, 2025
- New companies (January 1, 2024 – December 31, 2024): within 90 calendar days of formation
- New companies (January 1, 2025 onward): within 30 calendar days of formation
- Updated reports: within 30 calendar days of changes
- Corrected reports: within 30 calendar days of discovered inaccuracies
Preparation Considerations
Companies should assess CTA applicability, calculate ownership percentages, identify individuals exercising substantial control, and establish tracking systems for beneficial owner changes. Required information includes legal names, residential addresses, birthdates, and government-issued ID numbers with images.
Penalties
Violations carry civil penalties up to $591 per day, criminal fines up to $10,000, and potential imprisonment up to two years.