What is a BOI Report

What is a BOI report explained

A BOI report or Beneficial Owner Information report must be filed by most private US companies. Each company must identify the persons who own 25% or more, each control person and the person who filled the articles to first register the company. Further, when changes in ownership or control occur, each company must submit an updated BOI report. If needed, reporting companies must file corrected BOI reports to correct errors discovered on previously filed BOI reports.

US companies must file their BOI reports with the Financial Crimes Enforcement Network (FinCEN), abureau of the U.S. Department of the Treasury. Companies that were formed in the US or foreign companies registered to do business in the US before January 1, 2024, must file BOI report by January 1, 2025. Companies that are registered after January 1, 2024, must file BOI report within 30 days of the date of registration.

Reporting companies must provide information about the company and disclose their beneficial owners, which are the individuals that ultimately own or control them, and the company applicants who are the individuals that first registered the company in the US.

Beneficial owners are the natural persons that ultimately own 25% or more or control the reporting company. In cases where the ownership structure is complex, for example a company that is in turn owned by several other companies, the company must report the ultimate owner who is a natural person.

A company applicant is the individual who filled or directed the filling of the articles to first register the reporting in the US. Company applicants are usually accountants, attorneys or other professionals. 

On September 29, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a final rule on how to implement beneficial ownership information (BOI) reporting requirements. The requirements were mandated by the Corporate Transparency Act (CTA), enacted by U.S. Congress in January 2021, to target tax fraud, terrorism, and money laundering by requiring US-formed corporations and limited liability companies (LLCs) and certain foreign-owned entities doing business in the United States to report to FinCEN certain information about their beneficial owners.

The CTA includes both civil and criminal penalties for those who provide false or fraudulent beneficial ownership information to FinCEN or fail to report complete or updated beneficial ownership information to FinCEN. Violators, who fail to submit BOI reports or submit BOI reports with false information, face civil penalties of up to $500 for each day a violation continues. In cases where persons criminally violate the CTA, courts may issue fines of up to $10,000, sentence those responsible to 2 years in prison, or both.

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