Failing to file your Beneficial Ownership Information (BOI) report can lead to significant financial penalties and even criminal charges for individuals and companies.
Understanding Beneficial Ownership Information (BOI) Reporting
The Beneficial Ownership Information (BOI) reporting requirement stems from the Corporate Transparency Act (CTA), enacted to combat money laundering, terrorist financing, corruption, and other illicit activities. This law mandates that many companies doing business in the United States report information about their beneficial owners—the individuals who ultimately own or control the company—to the Financial Crimes Enforcement Network (FinCEN).
FinCEN is a bureau of the U.S. Department of the Treasury responsible for safeguarding the financial system from illicit use and combating money laundering and promoting national security.
Severe Consequences of Non-Compliance
Not adhering to the BOI reporting requirements can result in substantial penalties, both civil and criminal.
Financial Penalties
Companies that fail to file their BOI report or provide inaccurate information may face steep daily fines. These civil penalties are designed to encourage prompt compliance and can quickly accumulate.
| Penalty Type | Description | Amount/Duration |
|---|---|---|
| Civil | Failure to file a required BOI report, or providing false or fraudulent beneficial ownership information, or refusing to report. | Starting at $500 per day |
Criminal Penalties
In addition to financial penalties, willful violations of the BOI reporting requirements can lead to severe criminal charges. This includes intentionally failing to file a report or knowingly providing false or fraudulent beneficial ownership information.
Such criminal offenses can result in substantial fines and imprisonment:
- Fines: Up to $10,000
- Imprisonment: Up to two years in prison, or both.
These penalties underscore the government's serious commitment to enforcing the CTA and ensuring transparency in corporate ownership.
Who Must File a BOI Report?
Generally, two types of companies, referred to as "reporting companies," must file a BOI report with FinCEN:
- Domestic Reporting Companies: Corporations, limited liability companies (LLCs), and any other entities created by the filing of a document with a secretary of state or any similar office in the United United States.
- Foreign Reporting Companies: Entities formed under the law of a foreign country that are registered to do business in any U.S. state or tribal jurisdiction by the filing of a document with a secretary of state or any similar office.
There are 23 specific exemptions to these reporting requirements, primarily for entities already subject to substantial federal regulation, such as publicly traded companies, banks, and credit unions.
Important Deadlines to Note
The deadline for filing a BOI report depends on when your company was created or registered:
- Existing Companies (Created or registered before January 1, 2024): Must file their initial report by January 1, 2025.
- New Companies (Created or registered in 2024): Must file their initial report within 90 calendar days of receiving actual or public notice that their company's creation or registration is effective.
- Companies Created or Registered on or after January 1, 2025: Must file their initial report within 30 calendar days of receiving actual or public notice that their company's creation or registration is effective.
Any updates or corrections to previously filed information must be submitted within 30 days of the change.
Ensuring Compliance: Steps and Resources
To avoid penalties and ensure compliance with the CTA, companies should take the following steps:
- Determine if Your Company is a Reporting Company: Review FinCEN's guidance and FAQs to understand if your entity is subject to the reporting requirements.
- Identify All Beneficial Owners: Accurately identify individuals who directly or indirectly own or control 25% or more of the company, or who exercise substantial control over the company.
- Gather Required Information: Collect necessary details for each beneficial owner, including their full legal name, date of birth, current address, and a unique identifying number from an acceptable identification document (e.g., driver's license or passport), along with an image of that document.
- File Electronically: Submit the BOI report directly through FinCEN's secure online filing system, FinCEN BOIR. The reporting form is available at FinCEN's BOI E-Filing System.
- Stay Updated: Monitor FinCEN's website for any new guidance, FAQs, or updates to the regulations.
Given the complexities and potential penalties, it is often advisable to consult with a qualified legal or tax professional to ensure full compliance with the BOI reporting requirements.
