Beneficial Ownership Information (BOI) reporting took effect January 1, 2024. This has been a topic of interest over the past month during meetings I’ve attended.
News update, as of December 3rd the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA). The Court’s order states that neither the CTA nor the implementing rules adopted by the Financial Crimes Enforcement Network may be enforced.
The Court’s order is not a final decision. Businesses should remain prepared to comply with the CTA reporting requirements depending on how this proceeds through the courts. If the injunction is lifted, you must report as originally planned.
There has been confusion about what it is, who must report, and what happens if you don’t. I’ll clarify what and where to go for help, should you need professional assistance if the requirement is reinstated.
Background
In 2021, Congress enacted the bipartisan Corporate Transparency Act to curb illicit finance. This law requires many companies doing business in the United States to report information about who ultimately owns or controls them.
Effective January 1, 2024, The US Department of Treasury Financial Crimes Enforcement Network has been tasked with overseeing submissions and compliance with this Congressional Act.
Companies can file their BOI reports for free on the BOI E-Filing website. The information that must be reported includes: Company information, Beneficial owner information, Identifying number from a government-issued photo ID, Taxpayer Identification Number (EIN), and Image of the government-issued photo ID.
BOI FAQ’s
What companies will be required to report beneficial ownership information to FinCEN? Companies required to report are called reporting companies. There are two types of reporting companies:
- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
There are 23 types of entities that are exempt from the reporting requirements (see below). Carefully review the qualifying criteria before concluding that your company is exempt.
FinCEN’s Small Entity Compliance Guide for beneficial ownership information reporting includes the following flowchart to help identify if a company is a reporting company.
Are some companies exempt from the reporting requirement? Yes, 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.
The following table summarizes the 23 exemptions:
| Exemption No. | Exemption Short Title |
|---|---|
| 1 | Securities reporting issuer |
| 2 | Governmental authority |
| 3 | Bank |
| 4 | Credit union |
| 5 | Depository institution holding company |
| 6 | Money services business |
| 7 | Broker or dealer in securities |
| 8 | Securities exchange or clearing agency |
| 9 | Other Exchange Act registered entity |
| 10 | Investment company or investment adviser |
| 11 | Venture capital fund adviser |
| 12 | Insurance company |
| 13 | State-licensed insurance producer |
| 14 | Commodity Exchange Act registered entity |
| 15 | Accounting firm |
| 16 | Public utility |
| 17 | Financial market utility |
| 18 | Pooled investment vehicle |
| 19 | Tax-exempt entity |
| 20 | Entity assisting a tax-exempt entity |
| 21 | Large operating company |
| 22 | Subsidiary of certain exempt entities |
| 23 | Inactive entity |
BOI Filing
Information about FinCEN’s beneficial ownership information reporting requirements is available at https://www.fincen.gov/boi. This webpage includes a Small Entity Compliance Guide and responses to Frequently Asked Questions (FAQs) that can assist with your reporting questions.
You may also submit questions to FinCEN at https://www.fincen.gov/contact. This Reference Guide is explanatory only and the information in this pamphlet is accurate as of July 2024 and is subject to change in the future.
Additional information on the Corporate Transparency Act can be found here: https://www.fincen.gov/boi/Reference-materials. Additional information on current customer due diligence requirements can be found here: https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule.
Keeping Up
Keeping up with everything can be tough. I’ll do my best to keep you posted and recommend you keep in touch with your business accountant and/or attorney!
The key is to be ready for tomorrow while living fully today. Remembering this allows you to navigate change with grace while maintaining your peace of mind and personal well-being.
Feel free to reach out or check out my website for resources to assist you with your preparation. Send me an Email or Message if you have any questions. For additional information about my work check out my website @ The Living Planner or my online DIY information @ The Living Planner.
If you’re up for planning for your life’s administrative side, my book is a resource for you. The Living Planner What to Prepare Now While You Are Living © Check it out HERE.
Sharing a quote to inspire continued learning. “We are not what we know but what we are willing to learn.” – Mary Catherine Bateson
Have a good week❣️ Lynn
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