Provided by: Jennifer Kirschenbaum, Esq.
October 24, 2024
Question:
Jennifer,
I received a lot of spam on the corporate beneficial ownership filing deadline. What is it, do I have to comply?
Thanks,
Dr. A
Answer:
Maybe. And, its important you take the requirement seriously because non compliance will likely be easy to audit and comes with serious fines. Failure to file (file here - https://boiefiling.fincen.gov/) if you are required to file may result in up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day. The civil penalties are adjusted for inflation.
The purpose of the filing requirement (file here - https://boiefiling.fincen.gov/) is for the government to have knowledge on who actually controls smaller entities, and what those entities are about - so, snooping. Qualifying entities will need to provide details about individuals who own or control the company, regardless of which state it was formed in. This includes information such as the full name of the legal entity and any d/b/a, its tax ID, address and the owner's personal details, including the owner’s full name, residential address, date of birth and a copy of a government-issued ID. It is important to note, however, that no financial information is required as part of this reporting.
The filing deadline varies depending on when the entity was formed. If the entity was formed prior to January 1, 2024, the deadline for filing is December 31, 2024. For entities formed on or after January 1, 2024, there's a 90-day window from the formation date to submit the report. Entities formed after January 1, 2025 have 30 days to submit the report.
Additionally, any changes in ownership after the initial filing must be promptly reported to update the information. All of the information required can be reported online through the designated BOI Filing Portal available at https://boiefiling.fincen.gov/fileboir.
Determining who owns and controls an entity can be less than straight forward, sometimes. The frequently asked questions page, available at https://www.fincen.gov/boi-faqs, provides guidelines for making this determination. Any person or entity owning more than 25% of the entity is presumed to have control. Certain factors can be used to show that the entity does not actually have control, but this is not the case for a natural person. If an individual has certain control rights, this also needs to be reported. These rights include, but are not limited to, being responsible for the business, financial and corporate decisions or having the authority to add or remove senior officers or a majority of the board.
There are several exemptions from the reporting requirement. The Most Notable - the large operating company exception. A large operating company is defined as: (1) an entity that physically operates within the U.S., (2) employs more than 20 full-time U.S. residents and (3) reported at least $5 million in sales on its prior year’s tax return. It is important to note that neither “disregarded entities” nor newly formed entities, fall under the exemption. “Disregarded entities” are entities that are omitted for U.S. federal tax purposes and not treated as separate from the owner. Additionally, affiliates that exist within a corporate structure cannot combine employee counts to meet the exemption criteria. If a business is owned by an exempt holding company, it may also be exempt, but if there are other owners with significant control, their exemption status must also be considered. Lastly, if a business is exempt, any subsidiaries wholly owned by the business will also be exempt, unless specific conditions change the exemption status.
Filing is available online (file here - https://boiefiling.fincen.gov/) and may be self-explanatory. If you are confused and would like assistance, Taryn, my executive assistant/paralegal, who you may already know, is a wiz and has been assisting clients this past year. You can reach her directly at TCrimi@Kirschenbaumesq.com.
Jennifer,
I received a lot of spam on the corporate beneficial ownership filing deadline. What is it, do I have to comply?
Thanks,
Dr. A
Answer:
Maybe. And, its important you take the requirement seriously because non compliance will likely be easy to audit and comes with serious fines. Failure to file (file here - https://boiefiling.fincen.gov/) if you are required to file may result in up to two years imprisonment and fines up to $10,000, in addition to civil penalties of up to $591 per day. The civil penalties are adjusted for inflation.
The purpose of the filing requirement (file here - https://boiefiling.fincen.gov/) is for the government to have knowledge on who actually controls smaller entities, and what those entities are about - so, snooping. Qualifying entities will need to provide details about individuals who own or control the company, regardless of which state it was formed in. This includes information such as the full name of the legal entity and any d/b/a, its tax ID, address and the owner's personal details, including the owner’s full name, residential address, date of birth and a copy of a government-issued ID. It is important to note, however, that no financial information is required as part of this reporting.
The filing deadline varies depending on when the entity was formed. If the entity was formed prior to January 1, 2024, the deadline for filing is December 31, 2024. For entities formed on or after January 1, 2024, there's a 90-day window from the formation date to submit the report. Entities formed after January 1, 2025 have 30 days to submit the report.
Additionally, any changes in ownership after the initial filing must be promptly reported to update the information. All of the information required can be reported online through the designated BOI Filing Portal available at https://boiefiling.fincen.gov/fileboir.
Determining who owns and controls an entity can be less than straight forward, sometimes. The frequently asked questions page, available at https://www.fincen.gov/boi-faqs, provides guidelines for making this determination. Any person or entity owning more than 25% of the entity is presumed to have control. Certain factors can be used to show that the entity does not actually have control, but this is not the case for a natural person. If an individual has certain control rights, this also needs to be reported. These rights include, but are not limited to, being responsible for the business, financial and corporate decisions or having the authority to add or remove senior officers or a majority of the board.
There are several exemptions from the reporting requirement. The Most Notable - the large operating company exception. A large operating company is defined as: (1) an entity that physically operates within the U.S., (2) employs more than 20 full-time U.S. residents and (3) reported at least $5 million in sales on its prior year’s tax return. It is important to note that neither “disregarded entities” nor newly formed entities, fall under the exemption. “Disregarded entities” are entities that are omitted for U.S. federal tax purposes and not treated as separate from the owner. Additionally, affiliates that exist within a corporate structure cannot combine employee counts to meet the exemption criteria. If a business is owned by an exempt holding company, it may also be exempt, but if there are other owners with significant control, their exemption status must also be considered. Lastly, if a business is exempt, any subsidiaries wholly owned by the business will also be exempt, unless specific conditions change the exemption status.
Filing is available online (file here - https://boiefiling.fincen.gov/) and may be self-explanatory. If you are confused and would like assistance, Taryn, my executive assistant/paralegal, who you may already know, is a wiz and has been assisting clients this past year. You can reach her directly at TCrimi@Kirschenbaumesq.com.
Have a question for Jennifer? Email is best. You can reach her at Jennifer@Kirschenbaumesq.com.
