What You Need to Know: CORPORATE TRANSPARENCY ACT

To our clients who own businesses or rental real estate,

By now you are probably aware of a new non-tax regulatory filing requirement administered by the Financial Crimes Enforcement Network (FINCEN) called the Beneficial Owner Information (BOI) report.

BOI reporting requires certain corporations, limited liability companies (LLC), limited partnerships (LP) and business trusts to disclose those individuals who ultimately own or control the entity.

The purpose is to increase transparency and prevent illicit activities such as money laundering, tax evasion, and terrorist financing. Failure to comply with these new rules put in place under the Corporate Transparency Act can lead to significant civil and criminal penalties.

Generally, smaller closely held legal entities must file. Large operating companies, tax exempt organizations, inactive entities and certain investment advisory companies do not need to file the BOI form. (A large company is defined as a company which has more than 20 full-time employees in the US, generates more than $5 million in gross income from domestic sources in the previous year and has a physical presence in the US. )

Sole proprietorships or personally owned rental properties and general partnerships with no separate legal entity in place also do not need to file.

A full list of exempt entities can be found at www.fincen.gov under frequently asked questions.

Once it is determined that a specific exemption does not apply, filling out the BOI reporting form involves several key steps to ensure all necessary details are accurately provided.

• First, make sure you have all basic company information readily available such as the legal name (including d/b/a names), business address, and the Employer Identification Number (EIN).
• Second, identify the beneficial owners of the entity. Beneficial owners are individuals who directly or indirectly own 25% or more of the company or who exercise significant control over the entity’s operations.
• Third, gather personal information for each beneficial owner, including full name, date of birth, residential address, and a unique identification number, such as a driver’s license or passport number. All beneficial owners must provide a copy of their driver’s license or passport in order to correctly complete the form. This information is crucial for establishing the identity of the beneficial owners and ensuring transparency in the entity’s ownership structure.
• Lastly, prepare the BOI reporting form by entering the collected details into the designated sections online at boiefiling.fincen.gov/fileboir. (You may complete the form by entering the information directly on the website or by uploading a .pdf copy which is available at that same site. The .pdf copy allows you to partially complete and save the form rather than prepare it all at once.)

In 2024, newly created entities must file the report within 90 days of creation. Entities formed before 1/1/24 have until 1/1/25 to register. Next year the filing deadline will be more immediate upon creation of any new entities. After the initial filing, future filings are needed only when there is a change in company information, that of the beneficial owner, or there is an outright ownership change.

Once again, registration mainly applies to small closely held entities that are an LLC, LP or a corporation (including S corporations.)

If you would like Buckno Lisicky & Company to determine whether an exemption applies or ultimately prepare the report for you, please contact one of our offices. Our fees for preparing the BOI report start at $300 and can increase when reporting multiple owners or if detailed research is needed to determine whether an exemption applies to your entity.