What is BOI – Beneficial Ownership Information

Beneficial Ownership Information Cyron CPA - pils of reports

Many people are starting to hear about new BOI reporting requirements. Some know what it is, many have heard bits and pieces of what the new reporting requirement means, and some have no idea.  We want to get some good information out.  This is not meant as legal or accounting advice and we always encourage you to see a lawyer or call Cyron & Company to learn more.

BOI (Beneficial Ownership Information) was enacted by the Corporate Transparency Act, part of the National Defense Authorization Act which mandates disclosure for certain entities.

This significant update, expected to impact over 32 million businesses, aims to aid US law enforcement in combating financial crimes like money laundering and terrorism financing.  Unlike tax regulations, the CTA falls under the Bank Secrecy Act.  Therefore, BOI reports are submitted not to the IRS but to the Financial Crimes Enforcement Network (FinCEN), a branch of the Department of Treasury.

Who must report?

  • US Entities: Corporations, LLCs, or similar entities registered with a state secretary or similar entity.
  • Foreign Entities: Similar entities formed abroad but registered to do business in the US.

Exemptions

  • 23 categories, including publicly traded companies, banks, credit unions, and tax-exempt organizations. However, these exemptions are specific, and many such entities already comply with other reporting requirements.
  • “Large operating entities” with over 20 US employees, more than $5M in annual gross revenue, and a physical US presence.

Defining a Beneficial Owner

  • Individuals with “substantial control” over or at least a 25% ownership interest in a reporting company. The term “substantial control” is further detailed in the CTA regulations.

Reporting Timelines

  • New Entities (from 1/1/24): File within 30 days (a 90-day extension is proposed for entities created in 2024)
  • Existing Entities: File by 1/1/25
  • Updates or Corrections: Report within 30 days of changes or discovery of inaccuracies.

Required Information

  • Company details like name, business address, jurisdiction of formation, and TIN
  • Beneficial owner information, including personal details and identification documentation.

Non-Compliance Risks

The penalties if you don’t meet the reporting requirements are quite steep.  Failure to comply can lead to fines up to $10,000, daily penalties of $500, and potential jail time of up to two years.

As always for details about your business’ filing requirements you should contact your attorney or Cyron & Company.