Update as of December 4, 2024: The U.S. District Court for the Eastern District of Texas has suspended the implementation of the Corporate Transparency Act’s (CTA) Beneficial Ownership Information (BOI) reporting requirements. Read more here: U.S. District Court Suspends Implementation of BOI Reporting Requirements

What is Beneficial Ownership Information Reporting?

Check out our blog, Corporate Transparency Act Introduces Beneficial Ownership Reporting Rules for the details, but essentially Beneficial Ownership Information (“BOI”) reporting is an attempt by the U.S. government to combat fraud, money laundering, trafficking and other nefarious activity that historically could be obscured by the use of “shell” companies.

Most existing and new U.S. corporate entities will be required to file reports with the federal government (starting January 1, 2024) regarding their beneficial owners.

In January 2021, Congress passed the Corporate Transparency Act, which authorized the Department of the Treasury to require certain companies to report information about their true ownership. Recently, Treasury’s Financial Crimes Enforcement Network (“FINCEN”) published guidance outlining the specific requirements of the BOI reporting.

BOI reporting goes into effect on January 1, 2024.

Editor’s Note: As of March 1, 2024, members of the National Small Business Association (NSBA) are not subject to the Corporate Transparency Act (CTA) and therefore do not have any Beneficial Ownership Information (BOI) reporting obligations. Check out our blog, UPDATE: Corporate Transparency Act Ruled Unconstitutional, Here’s How BOI Reporting is Affected for the details.

When Does the Reporting Happen?

BOI reporting goes into effect on January 1, 2024. Companies formed after January 1, 2024 have 30 days from the date of formation to file their report. Companies already in existence on December 31, 2023 will have to file their initial BOI report by January 1, 2025.

There is no annual filing requirement, but rather a continuing reporting obligation that requires companies to file an updated BOI report within 30 days when there is a change to any information previously reported on a BOI report. In other words, once the initial BOI report is filed, no further reporting is required by the Reporting Company unless and until any of the information contained in the initial BOI report changes.

How is the BOI Reported?

FINCEN will issue a form for BOI reporting so that the reporting is standardized. The form will be available on or before the January 1, 2024 “go-live” date. Forms are currently in development, and FINCEN has committed to publishing the forms in the federal register for a public comment period “well in advance” of the go-live date.

Are There Penalties for Missed Filings?

The penalties for willfully providing false or fraudulent information in a BOI report, or for willfully failing to file a complete or updated BOI report, include a $500-per-day fine up to $10,000 and imprisonment for up to two years – potentially both.

These penalties potentially apply not just to the Reporting Company but to the individuals responsible for the company’s reporting to the extent that an individual willfully directs a Reporting Company not to report or willfully fails to report while in substantial control of the company.

A safe harbor provision in the rule provides that the penalties will not be enforced against filers who correct inaccurate filings within 90 days. There are also provisions in the rules which provide for similar penalties for the misuse or unauthorized disclosure of BOI.

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