New BOI reports Filing Requirements for Businesses - March 1st Update

UPDATE: On March 1st, the Corporate Transparency Act (CTA) was ruled unconstitutional in federal district court. District Court Judge Liles C Burke ruled in summary judgement that the CTA is unconstitutional exercise of Congress’s powers. The Beneficial Ownership Information reporting requirements are included under this. This has not stopped the Requirements to file BOI.

New BOI reports Filing Requirements for Businesses

NOTE: Bassler & Redick CPAs will NOT be preparing any BOI reports. This is considered a legal filing and it outside the scope of services we are legally allowed to provide.

Please read the following information to learn more about this new filing requirement.

On January 1, 2021, Congress passed the Anti-Money Laundering Act of 2020, which included theCorporate Transparency Act. This included a new reporting requirement for small businesses andcorporations. This is the BOI – Beneficial Ownership Information report. All small businesses andcorporations established before 1/1/24 will be required to file the BOI by 1/1/25. Any new entitiescreated in 2024 will have to file the BOI within ninety days of the creation of the business. After that,business will have only thirty days to file.

The BOI requires the reporting of beneficial owners of entities – those who directly or indirectly controleither more than 25% of the business or exercise “substantial control” over an entity. This is intended to provide FinCen (the Treasury Department’s Financial Crimes Enforcement Network) with information to address issues such as money laundering, human trafficking, and other criminal activities. Thisinformation will be made available to law enforcement entities as needed.

Importance of Filing 

 Failure to comply with the new reporting requirement can lead to massive penalties. Not filing or including false or fraudulent information can result in the following:•a $500 penalty per day, with no cap.•Criminal penalties of up to $10,000 and/or imprisonment for two years.

These penalties can be applied to anyone who “willfully fails to report complete or updated beneficialowner information to FinCEN.” This means that being unaware of the filing requirement or having adifficult time obtaining the necessary information may not waive the penalty. Please file this form timely and correctly to avoid any such issues!

Required Information

The beneficial ownership information that you will need to include on the report is the following:

For the corporation/LLC:•Full legal name•Trade names and “doing business as” names•Current address•Jurisdiction where entity was formed (state, tribal, or foreign)•EIN (employer identification number) 

 For Beneficial Owners:•Full legal name•Date of Birth•Current address•Unique identification number from passport, driver’s license, or other ID card issued by agovernment entity•Image of identification document above

Beneficial OwnershipAs mentioned above, beneficial ownership occurs in two cases:

•When someone directly or indirectly controls 25% of the ownership interests in thereporting company

•When someone directly or indirectly has “substantial control” over the reportingcompany

What is substantial control?

Control over an entity is determined by the power they have over the decisions of the entity. Thefollowing are examples of people with substantial control:

-Senior officer, such as president, CEO, or any officer with a similar function

-Someone with authority over the appointment of senior officers, such as a board ofdirectors

-Someone who directs, determines, or has substantial influence on important matters ofthe entity

Ownership Interest

Ownership interest generally refers to any instrument that grants ownership of an entity, such as stocks ownership.

Indirect ownership interest also matters. For example, if a company has more than 25% interest inanother business, that company and any qualifying owners of that entity may be required to be included in the BOI.

Exempt Organizations

There are some exceptions to this requirement, however they are very specific. Exempt organizationsinclude the following:

•Large operating companies that meet ALL the following requirementsEmploys more than twenty full time employees     -Has a physical operating presence in the US     -Has filed a tax return in the previous year with more than $5 million in gross receipts     -Certain types of banks, securities issues, credit unions, money transmitting businesses, security       exchange agencies, investment companies, venture capital funds, and financial market utilities

 Certain types of insurance companies, insurance producers 

Certain public accounting firms

Certain public utilities

Certain tax-exempt entities

Certain subsidiaries

Certain Non-Active entities, which meet the following requirements:     -Existed before 1/1/2020     -Is not engaged in active business     -Is not owned, directly or indirectly, by a foreign person     -No changed of ownership in last 12 months     -Has not sent or received funds > $1000 in last 12 months     -Does not hold assets including any ownership interest in a corporation, LLC, or similar     entity

When to File

You can file your report online at sometime on or after January 1, 2024.If your business existed prior to January 1, 2024, you have until January 1, 2025 to file.

If your business forms during 2024, you have ninety days to file.

If you form a new business starting in 2025, you will have only thirty days to file the BOI report.

Note: If there are ANY changed in beneficial ownership – including changed in owners, but also changesto the information about those owners (such as a change in address, or a new driver’s license), thosechanges must be made within thirty days by filing an updated report.

Additional Steps

For more information, you can visit FinCEN’s website here. information on filing the BOI, especially if you plan to file it yourself, you can read the Small EntityCompliance Guide here.

If you need more assistance, or do not feel comfortable filing this report yourself, please consult yourattorney.