The Financial Crimes Enforcement Network (“FinCEN”), a bureau of the U.S. Department of the Treasury, has released Beneficial Ownership Information Reporting Requirements Small Entity Compliance Guidance (“The Guidance”) to assist small entities in complying with the Beneficial Ownership Information (“BOI”) requirements, as required by the Corporate Transparency Act (“CTA”).

https://home.treasury.gov/news/press-releases/jy0979.

As the CTA is not a part of the tax code, the assessment and application of many of the requirements set forth in the regulations, including but not limited to the determination of beneficial ownership interest, necessitate the need for legal guidance and direction. As such, since we are not attorneys, our firm is not able to provide you with any legal determination as to whether an exemption applies to the nature of your entity or whether legal relationships constitute beneficial ownership.

You have a few options for filing your BOIR:

1. You can file this yourself by visiting the following website:  https://boiefiling.fincen.gov/
2. You can work with a legal advisor to file the BOIR on your behalf.

WHAT YOU NEED TO KNOW ABOUT THE REPORTING REQUIREMENT FOR THE BENEFICIAL OWNERSHIP INFORMATION REPORT (BOI).

Beneficial Ownership Reporting (BOR) is a regulatory requirement designed to enhance transparency in business ownership and combat financial crimes such as money laundering and tax evasion.

Entities typically required to report include:

• Corporations
• Limited liability companies (LLCs)
• Partnerships
• Trusts
• Any other legal entity that may conceal ownership

WHEN MUST COMPANIES FILE?

1. Existing companies: Reporting companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
2. Newly created or registered companies: Reporting companies created or registered to do business in the United States in 2024 have 90 calendar days to file after receiving actual or public notice that their company’s creation or registration is effective.
3. Companies whose beneficial ownership information has changed after an original filing must update their BOI reports within 30 days of the change. BOI reports are NOT filed annually; rather, after an initial report is filed, an additional filing is only required in the event of a change in BOI information.

WHAT ENTITIES ARE REQUIRED TO COMPLY WITH THE CTA’S BOI REPORTING REQUIREMENT?

Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements.

Your company may need to report information about its beneficial owners if it is:

• a corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
• a foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.

ARE ANY COMPANIES EXEMPT FROM THESE NEW CTA REPORTING REQUIREMENTS?

Although it is estimated that 90% of American businesses will be required to report their BOI under these new rules, FinCEN lists 23 types of businesses that are exempt from these reporting requirements. Most of the exemptions relate to businesses that are already heavily regulated such as banks, securities dealers, and public companies. Other most common exemptions are:

• Inactive companies formed on or before January 1, 2020
• Large companies with more than 20 full time employees in the U.S., more than $5 million in sales, and a physical office in the U.S.
• Tax-exempt entities

WHO ARE BENEFICIAL OWNERS OF A COMPANY THAT MUST BE IDENTIFIED TO FINCEN?

A beneficial owner is any individual who, directly or indirectly:

• Exercises substantial control over a reporting company or
• Owns or controls at least 25 percent of the ownership interests of a reporting company

WHAT INFORMATION MUST BE DISCLOSED ABOUT A REPORTING COMPANY?

Generally, reporting companies must provide four pieces of information about each beneficial owner:

• name
• date of birth
• address
• the identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe.

If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.

ADDITIONAL INFORMATION ON FILING DEADLINE EXTENSIONS FOR HURRICANE VICTIMS

FinCEN is providing this relief to reporting companies that meet two requirements.

First, the deadline for the reporting company to file an initial or updated BOI report must fall on or between October 4, 2024, and January 2, 2025.

Second, the reporting company must have its principal place of business in an area designated both by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance, and by the Internal Revenue Service (IRS) as eligible for tax filing relief as a result of Hurricane Milton.

If, after the date of this announcement, the IRS designates other areas affected by this natural disaster as eligible for tax filing relief, the reporting companies with their principal place of business in those areas will also receive the same BOI reporting relief from FinCEN automatically.

For example, the initial BOI report of a reporting company created or registered before January 1, 2024, normally would be due by January 1, 2025.

If such a company has its principal place of business in an area designated both by FEMA as qualifying for individual or public assistance and by the IRS as eligible for tax filing relief as a result of Hurricane Milton, the company’s initial BOI report is now instead due by July 1, 2025.

Similarly, the initial BOI report of a reporting company created or registered on July 25, 2024, normally would be due by October 23, 2024. If such a company has its principal place of business in an area designated both by FEMA as qualifying for individual or public assistance and by the IRS as eligible for tax filing relief as a result of Hurricane Milton, the company’s initial BOI report is now instead due by April 23, 2025.

In addition, FinCEN will work with any reporting company whose principal place of business is outside the disaster areas but that must consult records located in the affected areas to meet the deadline. Reporting companies with a principal place of business outside the affected areas and that are seeking assistance in meeting their filing obligations should contact FinCEN.

Additional information about the Reporting Rule and guidance materials are available at www.fincen.gov/boi or talk to your advisor today.