New Reporting Requirements: BOI Reports Required by Recent Law

by Stuart R. Josephs, CPA

The Corporate Transparency Act (CTA) was enacted as part of the National Defense Act for fiscal year 2021. Under the CTA, millions of entities must report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).

Who Must Report
Reporting is required for all domestic and foreign entities that have filed formation or registration documents with a U.S. state or Indian tribe, unless they meet one of 23 specified exemptions. Two of the major exemptions are for:

1. Large operating entities that meet all of these criteria:
   1. Employ more than 20 employees in the U.S.;
   2. Had gross revenue or sales over $5 million reported in the previous year’s federal income tax return; and
   3. Have a physical office in the U.S.
2. Publicly traded companies that have registered under Section 102 of the Sarbanes-Oxley Act.

Due Dates
Entities created or registered before 2024 must file their BOI report by Jan. 1, 2025. Entities created or registered after 2023 must file their BOI report within 30 days.

Note: FinCEN proposed extending this 30-day deadline to 90 days for entities created or registered after 2023 and before 2025. Entities created after 2024 would continue to be required to fill their initial BOI reports within 30 days of their creation or registration.

Reporting entities that have changes to previously reported information or discover errors in previously filed reports must file a new report within 30 days.

Information Required to be Reported
The entity must report the following:

• The entity's legal name and any trade or DBA names;
• Business address;
• State or tribal jurisdiction of formation or registration; and
• IRS Taxpayer Identification Number.

In addition, each reporting entity must provide the following on its beneficial owners (and its applicant(s)—for newly created entities): Name; date of birth; address; and unique identifying number and issuing jurisdiction from an acceptable identification document and an image of that document.

Severe Penalties for Noncompliance 

• Civil Penalties: Up to $500 per day that a violation continues.
• Criminal Penalties: These penalties include a $10,000 fine and/or up to two years in prison.

Summary of BOI Report Format 
The following is a summary of the BOI report:
Filing Information:

1. Type of filing:
   1. Initial report;
   2. Correction of prior report; 
   3. Update of prior report; or
   4. New exempt entity.
2. Date prepared.

The report then contains these categories:
Part I–Reporting Company Information

Part II–Company Applicant Information

1. Line 20 under Part II requires the following to be submitted:
   1. State-issued driver’s license;
   2. State/local tribe-issued ID;
   3. U.S. passport;
   4. Foreign passport; or
   5. Unknown.
2. Line 31 requires the document’s number to be provided.
3. Line 32 requires the country or jurisdiction issuing the identifying document to be shown, if known. If the United States is shown and the document is issued by a state, that state then must be shown. If unknown, a box “z” must be checked.
4. Line 33 requires an image of the identifying document to be attached. Instructions for the upload process will be provided at this point.

Part III–Beneficial Owner Information
Line 36 under this category requires the Beneficial Owner’s FinCEN ID to be provided. If not, the following must be shown:

• Full legal name;
• Date of birth;
• Residential address; and
• Form of identification and issuing jurisdiction.

The information required under this category is comparable to the information required under Part II for company applicants.

More Guidance
Additional guidance FinCEN provided on the BOI reporting requirements includes:

• Updated FAQs (May 11, 2023);
• BOI FAQs for clients (May 11, 2023);
• BOI client letter (Oct. 18, 2023); and
• A small entity compliance guide.

Caution: It is uncertain whether a CPA’s involvement in preparing and/or filing these BOI reports would be the unauthorized practice of law. For guidance, the appropriate authorities should be contacted.

Learn More
Visit Oh BOI: The Corporate Transparency Act and CPA Firms to learn more.

This article originally appeared in the December 2023 issue of California CPA magazine. Reprinted with permission from CalCPA.