Corporate Transparency Act – Beneficial Ownership Information Reporting Requirement *UPDATE*

*AICPA UPDATE*

An injunction has been issued regarding the BOI filing requirement in connection with the Texas Top Cop Shot, Inc., et al. v. Merrick Garland, Attorney General of the United States case. As a result, FinCEN is currently prohibited from enforcing BOI filing requirements while the case remains unresolved; however, the deadlines technically remain in place.

Understanding Beneficial Ownership Information (BOI) Reporting

The Financial Crimes Enforcement Network (FinCEN) has implemented Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA). These regulations aim to combat financial crimes, such as money laundering and terrorism financing, by enhancing corporate transparency. Businesses must understand their obligations under these rules to ensure compliance and avoid penalties.

What is BOI Reporting?

BOI reporting requires certain entities to disclose detailed information about their beneficial owners—individuals who own or control the company. This information is collected to create a secure national database that supports law enforcement efforts and promotes transparency in business operations.

Who Must File BOI Reports?

Domestic Entities

Entities organized in the United States that must report include:

• Corporations
• Limited liability companies (LLCs)
• Any similar entity created by filing a document with a secretary of state or a similar office under the law of a state or Indian tribe.

Foreign Entities

Entities formed outside the U.S. but registered to do business in the U.S. may also be subject to BOI reporting requirements.

Exemptions

Certain organizations are exempt from reporting (see full list on fincen.gov website), including:

• Publicly traded companies
• Tax-exempt organizations

Large operating companies meeting specific criteria (e.g., having more than 20 full-time employees and $5 million in gross receipts, among other requirements).

What Information is Required?

BOI reports must include:

1. Company Details:
   • Name
   • Address
   • State or jurisdiction of formation
   • Taxpayer Identification Number (TIN)
2. Beneficial Owner Details:
   • Full legal name
   • Date of birth
   • Residential address
   • Unique identifying information (e.g., driver’s license or passport number.)

Deadlines for BOI Reporting

• New Entities: Entities formed on or after January 1, 2024, must file their BOI report within 90 days of formation or registration.
• Existing Entities: Entities in existence before January 1, 2024, have until January 1, 2025, to file their initial report.

Why BOI Reporting is Important

BOI reporting strengthens national security by preventing the misuse of anonymous corporate structures. The database created by these filings helps law enforcement track and combat illicit activities. For businesses, compliance ensures alignment with federal regulations and demonstrates a commitment to ethical operations.

How to File BOI Reports

BOI reports must be submitted electronically through FinCEN’s secure online filing system. Accuracy is critical, as non-compliance or false reporting can result in significant penalties.

Next Steps for Businesses

1. Determine Your Filing Obligations: Assess whether your entity is subject to BOI reporting requirements.
2. Gather Required Information: Compile the necessary details about your company and its beneficial owners.
3. Prepare to Meet Deadlines: Set up a timeline to ensure timely and accurate reporting.
4. Seek Professional Guidance: Consult with legal or tax advisors to navigate the complexities of BOI compliance.

For additional information, visit FinCEN’s BOI Reporting Page.

Don’t Delay—Stay Compliant

With deadlines fast approaching, now is the time to prepare for BOI reporting. Taking action today protects your business, ensures compliance, and supports efforts to enhance corporate transparency.