Beginning on January 1, 2024, many corporations, limited liability companies, and other entities created or registered to do business in the United States must report information about their beneficial owners—the persons who ultimately own or control the company, to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Financial Crimes Enforcement Network (FinCEN) has issued FAQs on the beneficial ownership information (BOI) reporting requirements that will take effect on January 1, 2024.
In September 2022, FinCEN issued final regs implementing the Corporate Transparency Act (CTA). The CTA requires certain business entities created or registered to do business in the U.S. to report identifying information about their beneficial owners to FinCEN.
To supplement the guidance provided in the final regs, FinCEN recently issued a series of frequently asked questions (FAQs). The FAQs provide the following information:
Unless exempt, entities would need to report their beneficial ownership information (BOI) to FinCEN if they had to file a document with their state, territory, or Tribal government to create or register the entity to do business in that jurisdiction (reporting entity).
Sole-proprietors using a fictitious or doing business as (DBA) name may also need to file DOI information if they had to register their DBA with a state agency.
A reporting entity will need to provide FinCEN with its legal name and any trade name or DBA, its address, the jurisdiction in which it was formed or first registered, and its taxpayer identification number.
For each beneficial owner, the reporting company will need to provide the individual's legal name, birthdate, address and identifying number and copy of a driver's license, passport, or other approved document.
Per the FAQs, a "beneficial owner" of a reporting entity is any individual who exercises substantial control over the entity or who owns or controls at least 25% of the entity.
A beneficial owner:
- Directly or indirectly exercises “substantial control” over a company, or
- Directly or indirectly owns or controls 25% or more of a company’s ownership interests.
A person can be a beneficial owner when they have significant influence over the activities and decisions of the entity, even if they don’t own a substantial portion of the company’s stock or hold a formal title such as, but not limited to, CEO or President.
“Beneficial owners” could be found beyond the normal scope of ownership potentially extending to certain family members. These rules are complex and should be examined thoroughly to ensure compliance.
For entities created or registered to do business in the U.S. before January 1, 2024, their initial BOI reports are due by January 1, 2025. For entities created or registered to do business in the U.S. on or after January 1, 2024, their BOI reports are due within 30 calendar days of receiving notice that their entity's creation or registration is effective.
Updated reports will be required when there is a change to previously reported information about the reporting entity or its beneficial owners. These reports will be due within 30 calendar days after a change occurs.
Corrected reports will be required when previously reported information was inaccurate when filed. Corrected reports will be due within 30 calendar days of the error's discovery.
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