Understanding FinCEN BOI Reporting Requirements: An Overview

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The Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury, has implemented new Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA). These requirements aim to enhance transparency and fight financial crimes like money laundering and tax evasion. Below, we provide a detailed overview, including compliance requirements, deadlines, exemptions, and recent legal updates.

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Who Must Comply with FinCEN BOI Reporting?

FinCEN’s BOI reporting rules apply to a wide range of entities, particularly:

• Corporations

• Limited Liability Companies (LLCs)

• Other entities created by filing a document with a secretary of state or similar office, such as limited liability partnerships, business trusts, and most limited partnerships

** Entities are required to submit detailed information about their beneficial owners and company applicants.

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Exemptions from BOI Reporting

Certain entities are exempt from these reporting requirements. Notable exemptions include:

• Publicly traded companies

• Banks, credit unions, and insurance companies

• Inactive entities meeting specific criteria

• Entities subject to significant federal or state regulation

** A comprehensive list of exemptions is available on FinCEN’s official website.‍

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Key Deadlines for BOI Reporting

Entities must adhere to the following deadlines for BOI report submissions:

• Entities formed or registered before January 1, 2024: Must file by January 1, 2025.

• Entities formed or registered on or after January 1, 2024: Must file within 90 days of formation or registration.

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Consequences for Noncompliance

Failure to comply with the BOI reporting requirements can result in significant penalties. Consequences include:

• Civil penalties: Fines of up to $500 per day until the BOI report is filed correctly.

• Criminal penalties: For willful violations, penalties can include fines of up to $10,000 and imprisonment for up to two years – we've seen this level of action taken.

** Noncompliance can also result in additional scrutiny from regulatory authorities, which may lead to further legal and financial repercussions for the entity involved.

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Required Information for BOI Reports

Entities must report the following information for each beneficial owner and company applicant:

• Full legal name

• Date of birth

• Residential address

• Unique identifying number from an acceptable identification document (e.g., passport, driver’s license)

• Image of the identification document

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How to Submit BOI Reports

BOI information must be reported electronically through FinCEN’s BOI E-Filing System. For step-by-step instructions and FAQs, visit FinCEN’s FAQ page.

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Impact of Recent Court Decisions on BOI Reporting

On March 1, 2024, the Northern District of Alabama ruled in the case of National Small Business United v. Yellen that the CTA’s BOI reporting requirements were unconstitutional for specific plaintiffs, including the National Small Business Association and its members as of that date. Consequently, these entities are temporarily exempt from reporting. Despite this ruling, FinCEN has instructed all other entities to continue complying with the BOI reporting requirements.

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Practical Guidance for Businesses

Given the complexity and potential legal ramifications of BOI reporting, it is recommended that corporate officers, LLC members, or partners handle the reporting directly. Cruncher Accounting, PC will likely not provide BOI reporting services. We advise businesses to consult with legal counsel or use FinCEN’s resources to ensure compliance.

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For more detailed guidance, please visit FinCEN’s official website and their FAQ page. FinCEN published this tutorial on how to file the BOIR.

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