The Financial Crimes Enforcement Network (FinCEN), part of the U.S. Department of Treasury is set to begin Small Entity Compliance implementation and enforcement of provisions related to Beneficial Owners Reporting as of January 1, 2024.
A Small Entity Compliance Guide (available in multiple languages) has been published by FinCEN to help small entities comply with the requirements of the Beneficial Ownership Information Reporting Rule (the Rule) which was implemented by the Treasury Department under provisions of Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996. The Rule is found at 1010.380 in title 31 of the Code of Federal Regulations (CFR).
The reporting requirements stem from the Rule which requires certain entities to file beneficial ownership information (BOI) reports to FinCEN. These reports contain information about the entity itself and two categories of individuals: (1) Beneficial owners, and (2) Company applicants.
In general, a 'beneficial owner' is an individual who owns or controls at least 25 percent of a company or has substantial control over the company. A 'company applicant' is an individual who directly files or is primarily responsible for the filing of the document that creates or registers the company.
Starting on January 1, 2024, BOI reports must be filed electronically using FinCEN’s secure filing system. FinCEN will store BOI reports in a centralized database and only share this information with authorized users for purposes specified by law.
When You Need to File Reports
- Reports will be accepted starting on January 1, 2024.
- Reporting companies created or registered to do business before January 1, 2024, will have additional time — until January 1, 2025 — to file their initial BOI reports.
- Reporting companies created or registered on or after January 1, 2024, will have 30 days after receiving notice of their company’s creation or registration to file their initial BOI reports.
Finding out More about BOI Reporting
- The FinCEN Small Entity Compliance Guide regarding BOI Reporting can be found at www.fincen.gov/boi/small-entity-compliance-guide.
- Additional information about the Reporting Rule and guidance materials are available at www.fincen.gov/boi.
- FinCEN has issued and will continue to issue frequently asked questions to address specific questions on the topic. They can be found here: www.fincen.gov/boi-faqs.
- In addition, if you have any questions regarding BOI reporting obligations, you should contact FinCEN at www.fincen.gov/contact.
Not All Companies are Required to Report
Not all companies are required to report BOI to FinCEN under the Reporting Rule. Companies are required to report only if they meet the Reporting Rule’s definition of a “reporting company” and do not qualify for an exemption.
The Reporting Rule requires that all “reporting companies” file BOI reports with FinCEN within the previously specified time frames. A reporting company is any entity that meets the “reporting company” definition and does not qualify for an exemption. There are two categories of reporting companies: a “domestic reporting company” and a “foreign reporting company”.
If your company is neither a “domestic reporting company” nor “foreign reporting company” because it does not meet either definition (as described below) or it qualifies for an exemption, then it is not required to file a BOI report with FinCEN.
The illustration below, taken from official FinCen resource content, differentiates 'reporting companies' vs 'not reporting companies.'
Source: FinCEN BOI Small Entity Compliance Guide
As you can see most 'domestic' (US) companies, will fall into the "possible domestic reporting company", but there are also exemptions.
If we haven't already gotten your attention let me give you a couple of quotes regarding failure to report.
- "The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure."
- "Additionally, a person may be subject to civil and/or criminal penalties for willfully causing a company not to file a required BOI report or to report incomplete or false beneficial ownership information to FinCEN."
This Insightful Accountant feature story is intended to make you aware of the FinCEN BOI Reporting requirements. It is not intended to serve as a comprehensive guide for determining your need to comply or your exemption from compliance requirements.
We have made you aware where you can obtain official information in the section above titled, Finding out More about BOI Reporting.
Should you have questions, review the references cited, or obtain competent legal counsel in this area of the law for advice.