BOI Reporting Requirements: Understanding the Basics

For businesses operating in the United States, understanding the Beneficial Ownership Information (BOI) reporting requirements is essential.

Mandated by the Financial Crimes Enforcement Network (FinCEN), the BOI report is a critical tool designed to enhance transparency and combat financial crimes, such as money laundering and terrorist financing.

This comprehensive guide outlines who is required to file the BOI report, the specific information that must be included, and the various elements of BOI reporting.

Who is Required to File the BOI Report?

Reporting companies, also known as entities obligated to disclose beneficial ownership information to FinCEN, must submit the BOI report. Based on the classification, the reporting companies fall into two distinct categories.

• Domestic reporting companies, such as Limited Liability Companies, Corporations, and other partnerships, are entities formed or registered within the United States according to U.S. tax law.
• Foreign reporting companies, the entities formed or registered outside the U.S. but conducting business or trade activities within the U.S.

What Information is Needed to File the BOI Report?

When submitting the Beneficial Ownership Information (BOI) report to FinCEN, you will need to provide the following details.

• Report type
• Reporting company details
• Company applicant details
• Beneficial ownership details

Let’s examine each piece of information more closely.

Report Type:

It is important to understand that different types of BOI report submissions are available.

• Initial BOI Report: 
• The initial submission of the BOI report to the FinCEN.
• Updated BOI Report: 
• If any changes are needed to the information reported in the initial BOI report, you must report the change by filing an updated report. This includes adding a new beneficial owner or altering the ownership structure, etc.  
• Correction of the Report:
• If a previously filed BOI report contains inaccuracies or outdated information, you must file a corrected BOI report to update the incorrect information.
• Newly Exempt Entity Report
• If your company has previously submitted a BOIR but is now exempt from filing, you should submit a ‘Newly Exempt Entity’ BOI report to FinCEN. 

Reporting Company Information:

You must provide the following information about the reporting company in your BOI report.

• Full legal name
• Trade name or DBA
• Complete current U.S. address
• State, Tribal, or foreign jurisdiction of formation
• TIN (Taxpayer Identification Number), which includes EIN (Employee Identification Number)

Company Applicant Information:

Reporting companies established on or after January 1, 2024, must include individual applicant information in the BOI report submitted to FinCEN. The Company Applicant must be the person responsible for filing the papers to register the reporting company with the secretary of state or similar office. Legal entities or organizations are not permitted to serve as company applicants. You can report a maximum of two company applicants. 

You must report the following information about the company applicants.

• Full Name
• Date of Birth
• Address (When the person filing the documents should report the complete business street address or else report the residential address)
• Identification documents such as driver’s license or passport
• Unique Identifier Number

Beneficial Owner Information:

A beneficial owner is an individual or entity with significant control over a reporting company or owns or controls more than 25% ownership interest in a reporting company, directly or indirectly. 

You must report the following information about the beneficial owners.

• Full Name
• Date of Birth
• Residential address
• Identification documents’ images such as driver’s license or passport
• Unique Identifier Number

What Identification Documents are Acceptable?

Acceptable identification documents include:

• Valid U.S. driver's license
• Acceptable ID from a U.S. state, local government, or Indian Tribe
• Valid U.S. government-issued passport
• Valid foreign government-issued passport (if other forms of ID are not available)

What Does FinCEN ID Mean?

The "FinCEN ID" is a unique identifying number obtained from FinCEN by reporting entities or individuals upon submission of all relevant information.

If a company applicant has already obtained a FinCEN identifier, they can choose to report the FinCEN ID in the BOI report instead of providing certain requirements, such as full legal name, date of birth, and address. While not mandatory, providing the FinCEN ID significantly simplifies the filing process.

Special Rules for BOI Reporting

You must be aware of the following special rules established by FinCEN regarding BOI reporting requirements to ensure compliance. 

• Owned by exempt entity: If a reporting company's ownership interests are held through exempt entities, it can report the names of the exempt entities instead of individual beneficial owners.
• Minor Child: When reporting on a minor child as a beneficial owner, the parent’s or guardian’s details should be submitted in FinCEN’s BOI report. This rule doesn't apply once the child reaches the age of majority.
• Foreign Pooled Investment Vehicle: If a reporting company was formed under the laws of a foreign country and is considered a reporting company except for being a pooled investment vehicle, it is not required to report information about every beneficial owner and company applicant.
• Company Applicants:  For companies established before January 1, 2024, no company applicant details may be submitted for the reporting company.

When is the Deadline to Submit the BOI Report?

The deadline for submitting your reporting company’s BOI filing depends on the formation/registration date.

• Companies formed or registered before January 1, 2024, must submit the BOI report by January 1, 2025.
• Companies formed or registered on or after January 1, 2024, must submit the BOI report within 90 days from the effective registration date.
• Companies formed or registered on or after January 1, 2025, must submit the BOI report within 30 days from the effective registration date.
• Updated or corrected BOI reports must be submitted within 30 days of any changes or updates to company information or beneficial owners.

What are the Penalties for Non-Compliance?

Here are the penalties for non-compliance with BOI reporting guidelines.

• Civil penalties can range up to $591 per day for non-compliance.
• Criminal penalties can range up to $10,000 or up to two years imprisonment.

The Bottom Line

In summary, compliance with the Beneficial Ownership Information (BOI) reporting requirements is essential for maintaining transparency and adhering to FinCEN regulations.

Understand who needs to file, the required information, and deadlines to meet obligations and avoid penalties.

Stay informed, promptly update any changes, and maintain accurate records to help prevent financial crimes.