What Is A BOI Filing and Do I Have To Do It?

A quick guide to the new BOI filing requirement!

Beneficial Ownership Information (BOI) Reporting

A BOI filing refers to the “Beneficial Ownership Information Reporting” that is now required for most U.S. corporations, limited liability companies (LLCs), and similar entities. The requirement is part of the Corporate Transparency Act (CTA), P.L. 116-283 that was enacted in 2021 to combat illicit activity including tax fraud, money laundering, and financing for terrorism.

The report, administered by the Treasury’s Financial Crimes Enforcement Network (FinCEN), includes information about individuals who directly or indirectly own or control at least 25% of the entity, or exercise substantial control over it. This information includes the beneficial owner’s full name, date of birth, address, and a unique identifying number from an acceptable identification document (e.g., passport or driver’s license).

The deadline to complete these reports (for each entity where you are a beneficial owner as described above) is January 1, 2025 for entities that existed before January 1, 2024. The deadline for new entities created on or after January 1, 2024 is 30 days from the date of creation/registration.

Non-compliance can lead to significant penalties, including fines of $591/day, up to $10,000, and possible imprisonment.

Who Should File?

There is a lot of confusion around who should be responsible for filing BOI reports. Many associate CPAs with income & payroll tax filings and attorneys with Secretary of State reports.

For most small entities, especially those with a single beneficial owner, the report can be finished in less than 15 minutes and requires minimal effort. In these instances, it would be best to file your own reports.

For larger entities, or for individuals who have many entities, make sure you have an open line of communication between yourself, your CPA, and your attorney to make sure there is not a misunderstanding of who will be responsible for handling the BOI reports.

There are also 23 types of entities that are exempt from filing a BOI report (exemption table), and for those instances this requirement will not need to be completed.

Unconstitutional?

Many business owners, CPAs, and attorneys have argued that this requirement goes after the privacy of small business owners who are already compliant with IRS, state, and local filing requirements. The privacy concerns, increased compliance on small businesses, and potential ineffectiveness on BOI reporting has been challenged in the courts.

On March 1, 2024, the U.S. District Court for the Northern District of Alabama ruled that the CTA is unconstitutional. The U.S. Justice Department (DOJ) then appealed this decision, so it will likely take some time for the courts to resolve the issue nationwide.

Wrapping It Up

The AICPA is encouraging small businesses to continue to file BOI reports to keep their business in compliance, while also pushing for suspension of the BOI reporting rule. If you have not filed your BOI report yet, you can go to the BOI e-filing system and complete your report.

“Disclaimer: This is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Consult with your own attorney, CPA, and/or other advisors regarding your specific situation.”