If your reporting company has not complied yet, time may be running out. 

Most LLCs and many other entities (“reporting companies”) have a relatively new federal government filing requirement. The reporting started on January 1, 2024. The reporting is required under the Corporate Transparency Act (CTA) which is now federal law. Most reporting companies are entities that were formed through a state government, through a secretary of state or similar office. Many entities formed in foreign countries are also reporting companies, if they are registered to do business in the United States.

If your reporting company was formed (created or registered) before 2024, it has until the end of this year to file its initial report, unless exempted.* 

If your reporting company was formed (created or registered) during 2024, it has 90 days to file its initial report, unless exempted. *

If your reporting company is formed on or after January 1, 2025, it has 30 days to file its initial report, unless exempted. *

If beneficial owner information changes, the reporting company must file an updated BOIR within 30 days. *

There is NO annual reporting requirement. There is NO fee to file the report with FinCEN. 

*There is some BOI reporting relief for some areas affected by hurricanes. You can review that relief information here.

If your company has this FINCEN Beneficial Ownership Information (BOI) filing requirement (which would make it a “reporting company”), then make sure you file in a timely manner. Unless exempted, certain entities have to file what is called a Beneficial Ownership Information Report (BOIR) to a bureau within the US Treasury, the Financial Crimes Enforcement Network (FinCEN). 

The purpose of the BOI reporting requirement is to help prevent and uncover crimes such as money laundering, tax fraud, and financing terrorism. The reports are not public information. Who can access this information? Please look at FinCEN’s FAQs for those details. 

NOT every company or LLC has to file a BOIR, but most LLCs do have to file one. There is a requirement to file an initial report and any time the beneficial owner information changes.

The type of information collected regarding the beneficial owner includes names, addresses, and dates of birth. Please note that some individuals other than actual owners can be considered beneficial owners. A person who has direct or indirect ownership OR control is considered a beneficial owner. For some entities determining who all the beneficial owners are may be the most difficult part of the reporting. This is one of the big parts that lawyers worry about. You can see more about the information collected here. IF you have any doubt on who might be a beneficial owner, I recommend consulting a lawyer. 

Is your company or LLC exempt?

There are 23 categories of exempted categories. My experience this year so far is that most LLCs do not qualify to be exempted. The list can be found on the FAQs, but if you think you qualify for an exemption review the actual law and this guide as well. Or better yet, consult a lawyer. The FinCEN BOI Small Entity appliance guide has checklists for the criteria needing to be met for each exemption category. 

The one I look at most often is the Inactive entity exemption category. I often find taxpayers with inactive LLCs that have not been dissolved. Most  inactive LLCs DO NOT seem to qualify because they do not meet all 6 of the criteria to be exempt under the Inactive exemption category. But if you have an inactive LLC, certainly check. 

Penalties

There has been a lot of emphasis on the potential penalties for failing to file a BOIR when required, filing false information, and not updating information. The DAILY penalty for noncompliance increases with inflation and is currently $591 each day of noncompliance. This penalty is a civil penalty for willful noncompliance. I am not sure how aggressive FinCEN will be in determining and arguing whether or not any noncompliance is willful. I view it as wise to avoid finding out. 

There are also criminal penalties. A person who willfully violates the BOI reporting requirements may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.

Please note that this BOI reporting requirement is NOT a tax matter. While tax professionals are aware of this reporting requirement, and some firms may be assisting with BOI filings, many are not assisting with BOI filings. 

The best starting point for resources for this BOI reporting and the place to DIY report on your own (if you choose to do so)  is the FinCEN website. 

FinCEN BOI main website page. 

FAQs.

FinCEN BOI Small Entity appliance guide

And you can file BOI reports here. 

And take a look at this “how to” video before paying someone to file your BOI report. Although, again, if you have any doubt on who may be a beneficial owner or any doubt or difficulty with filing, consulting a legal professional would be wise. 

A final note. There is a lawsuit in progress arguing that the BOI reporting is not Constitutional and cannot be required. There are a few reporting companies that do not have to file a BOIR until this lawsuit is further resolved. If your reporting company is not listed as one of those companies, then you have to file a BOIR. If you want to research this lawsuit, do an internet search for National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.).