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Beneficial Ownership Information – Effective January 1, 2024.


There have been rumblings throughout the business communities about a new federal reporting requirement for businesses.  The U.S. Treasury:  Financial Crimes Enforcement Network (“FinCen”) states on its website that “many companies will be required to report information to the U.S. government about who ultimately owns and controls them.”[1]  This is the Beneficial Ownership Information reporting requirement (“BOI”). 


Back in 2021, the Corporate Transparency Act was passed into law.  31 U.S.C. s. 5336.[2]  The intent of the Corporate Transparency Act was to help address the U.S. government’s efforts in deterring bad actors from hiding or benefiting from the use of shell companies or other business structures designed to launder money, fund terrorism, participate in human and/or drug trafficking, and engage in securities fraud.[3]  The law requires that businesses report who the beneficial owners are (who ultimately controls the company) to the FinCen.[4]


The law defines a beneficial owner as an individual who directly or indirectly exercises substantial control over an entity or owns or controls not less than 25 percent of the ownership interests of the entity.  31 U.S.C. s. 5336, (a)(3)(A)(i-ii).


The deadline for businesses to report (those created prior to January 1, 2024) to BOI is January 1, 2025.  If a business was created on or after January 1, 2024, then a report must be submitted to BOI within 90 days of becoming active.  If any changes are made to the entity, then an update regarding the change is due in one year from the change.


Companies that are required to report are:


1.      Corporations;

2.      Limited Liability Companies (“LLCs);

3.      Any company that requires filing documents with the secretary of state(s), or similar office/tribe; and/or

4.      Any foreign company registered to do business in the U.S. or tribal territories.


There are a series of exempt companies that are not required to report.  Please carefully review the statute before making a determination as to whether a company is exempt or not.


If reporting is required, and a company willfully violates the law, there may be fines of $500 for each day that the violation continues or has not been remedied, and up to $10,000 and imprisonment not more than two years.  If an error is noticed, then there is a safe harbor provision if the information is corrected within 90 days.

 

To report, on or after January 1, 2024, please visit FinCen’s website:  www.fincen.gov/boi


We will be providing more information in the coming weeks about this law and other compliance issues that we notice.


Sincerely,

-Kyle and Niles

Beantown Law Group, LLC

 


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