In 2021, Congress enacted the Corporate Transparency Act (CTA) which now requires filing a BOIR (beneficial ownership information report). This law created a beneficial ownership information (BOI) reporting requirement as part of the US government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures. The CTA requires many companies formed or operating in the US to report information about their beneficial owners to the US Treasury’s Financial Crimes Enforcement Network (FinCEN).
Beginning on January 1, 2024, many companies, both foreign and domestic, that are operating in the US will now have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. For companies formed before January 1, 2024, they will have until January 1, 2025, to file their BOIR. See the “When Do I Report?” section as there are different due dates depending on events that may occur throughout the year from formation to change in ownership to even changes in address.
Who Has to Report?
Companies required to report are called reporting companies. Reporting companies may have to obtain information from their beneficial owners and report that information to FinCEN.
Your company may be a reporting company and need to report information about its beneficial owners if your company is:
- A corporation, a limited liability company (LLC), or was otherwise created in the US 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 operating in the US and was registered to do business in any US state or Indian tribe by such a filing
Who Does Not Have to Report?
Twenty-three types of entities are exempt from the BOI reporting requirements. These entities include publicly traded companies, nonprofits and certain large operating companies.
FinCEN’s Small Entity Compliance Guide includes checklists for each of the 23 exemptions that may help determine whether your company qualifies for an exemption.
Please review Chapter 1.2 of the Guide for more information. The guide can be found at: https://www.fincen.gov/boi/small-entity-compliance-guide.
Also, sole proprietorships (not SMLLCs) are not required to file a BOIR unless a sole proprietorship was created (or, if a foreign sole proprietorship, registered to do business) in the US by filing a document with a secretary of state or similar office (i.e. SMLLC). Filing a “doing business as” (DBA) is not considered filing a document with a secretary of state or similar office. Therefore, it does not require completion of a BOIR.
How Do I Report?
Reporting companies will have to report BOI electronically through FinCEN’s website: www.fincen.gov/boi.
The system will provide the filer with a confirmation of receipt once a completed report is filed with FinCEN.
When Do I Report?
Reports will be accepted starting on January 1, 2024.
Any updates or corrections to BOI that you previously filed with FinCEN must be submitted within 30 days.
What Information Must be Reported?
- Full legal name of the reporting company
- Any trade names or DBAs
- A complete current address
- The state of formation of the company
- The company’s taxpayer identification number
Details About Every Beneficial Owner and Every Company Applicant:
A beneficial owner is an individual who directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise exercises substantial control over the entity; or owns or controls at least 25 percent of the ownership interests of the entity.
A company applicant is an individual who directly files an application to form a corporation, limited liability company, or other similar entity, and /or an individual who is primarily responsible for directing or controlling the filing of the relevant document by another.
For each, the company must report:
- The full legal name of the individual
- Their date of birth
- Their complete current address
- A unique identifying number from an acceptable identification document such as a driver’s license or passport
- An image of the document showing the unique identifying number
Should I Obtain a FinCEN Identifier (FinCEN ID) (Optional), and If So, How Do I Obtain One?
Obtaining a FinCEN ID to file a BOIR is an optional step in the process. It does, however, offer some benefits.
- It shifts the burden of updating beneficial owner information, for example, an address change, to the beneficial owner and avoids the reporting company having to file an updated report
- It avoids entering information multiple times for an individual who is a beneficial owner of multiple entities
To get a FinCEN ID, go to: https://www.fincen.gov/boi.
You will need to sign in with a login.gov account. If you do not have a login.gov account, you can create one by clicking the blue box. You must log in with two-factor authentication (2FA) to access this application. Once you log in, you are directed to the FinCEN ID Application.
To complete the application:
- Enter your full legal name and date of birth
- Enter your address
- Enter an identifying document and an image (US Passport, State Driver’s License, US Passport Card, etc.)
- Certify the information provided is true, correct and complete. Pay close attention to the reminder that the willful provision of false or fraudulent information is subject to civil or criminal penalties
- Once submitted, you should receive your FinCEN ID within approximately 30 minutes which can be used when completing the BOI portion of the BOIR (fourth section of the BOIR described later)
Filing a BOIR
To file the BOIR, visit the BOI E-Filing System. There is no log in requirement to access this system, unlike the FinCEN ID system. Click on the “Get Started” blue button under BOI E-Filing.
There are two options to file a BOI Report at FinCEN, similar to an FBAR: the PDF upload and the online system.
The PDF Option
Anyone who has filed an FBAR through the FinCEN site knows the PDF upload process:
- Download the PDF version of the BOIR from FinCEN
- Complete the necessary sections of the PDF BOIR
- Sign the PDF report
- Upload the report to FinCEN and submit (e-filing acceptance acknowledgement can take 24-48 hours from date of filing)
The Online System
After clicking on “Prepare and Submit BOIR” under the File Online BOIR, there are five steps to file the BOIR.
Enter the report type and the preparation date (the system auto-populates the preparation date).
The reporting company provides the required information about itself. A reporting company can request to receive a FinCEN ID by selecting box 3. The reporting company can add a trade name or a “doing business as” (DBA).
The reporting company must provide a tax identification number. One of the options is a Social Security number. I do not think a single-member LLC (SMLLC) with no EIN requirement will have to get an EIN to file the BOIR; however, this is a non-tax reason why an SMLLC may request an EIN when it is otherwise not required to do so.
The reporting company must list the formation jurisdiction. This may be different than the primary location where the entity does business.
Next the reporting company must disclose its current US address.
The third section is the disclosure of the reporting company’s company applicant(s). The company applicant is the individual or firm who formed the entity by filing the documents with the Secretary of State or equivalent office.
A reporting company that existed as of January 1, 2024, is exempt from providing company application information. Be sure to check box 16 to avoid having to complete this section, if applicable.
The fourth section is the disclosure of the reporting company’s beneficial owner(s). If you previously obtained a FinCEN ID, this section may be simple to complete by entering the FinCEN ID that you obtained before starting the BOIR.
For beneficial owners without a FinCEN ID, the reporting company will have to provide the same information required for the FinCEN ID for each beneficial owner:
- Full legal name and date of birth
- Identifying document and an image of said document
The reporting company can add more beneficial owners by clicking the “Add Beneficial Owner” blue box in the upper right corner of the screen.
The last section of the BOIR is submitting the report. The individual submitting the report on behalf of the reporting company must provide their name and email address.
After submitting the report, the final screen verifies the BOIR was submitted to FinCEN with a BOIR ID and Submission Tracking ID. If the reporting company requested a FinCEN ID, it is displayed on the final screen. Also, usually displayed is a Submission Status Confirmation and a blue button that reads “Download Transcript.”
We would suggest keeping a copy of this confirmation page and downloading the BOIR transcript, which is a summary of all of the information provided in the BOIR. An acceptance acknowledgement generally will arrive within 24-48 business hours.
FinCEN is a fairly user-friendly site when it comes to completing and submitting reports. The FinCEN site also contains a large FAQ section to assist in clearing up frequently asked questions. The FAQs can be found at: https://www.fincen.gov/boi-faqs.