FinCEN BOI Questions and Answers

Financial Crimes Enforcement Network Beneficial Ownership Information (FinCenBOI )

November 28, 2023

Understanding the Corporate Transparency Act: What Business Owners Need to Know

FinCenBOI created big changes for businesses starting January 1, 2024, as the Corporate Transparency Act (CTA) comes into play. This new law mandates that certain businesses must reveal their beneficial ownership information (referred to as “BOI”).

But what exactly does this mean for you? The CTA, which was introduced as part of the National Defense Act for Fiscal Year 2021, targets entities where individuals have ownership or control.

The aim? To assist law enforcement in curbing money laundering, terrorism financing, and other illegal activities. This act isn’t a tax code amendment. Instead, it falls under the Bank Secrecy Act, requiring specific financial transaction record-keeping and report filing. The reports won’t head to the IRS but to the Financial Crimes Enforcement Network (FinCEN), a part of the Department of Treasury.

So, who needs to comply with these new rules?

Domestic and foreign entities are subject to the CTA, encompassing corporations, LLCs, and similar organizations formed or registered with relevant offices.
However, exemptions exist for certain entities, like publicly traded companies, banks, credit unions, and others already heavily regulated by the government. There’s also an exemption for “large operating entities,” meeting specific criteria related to employee count, revenue, and presence in the U.S.

The term “beneficial owner” refers to an individual exerting significant control over a reporting company or owning/controlling at least 25% of its interests. This includes senior officers, regardless of formal titles or ownership stakes.

Regarding filing timelines

FinCenBOI timelines vary based on entity registration and beneficial owner information changes. New entities typically have 30 days (with a proposed extension for 2024 creations), while existing ones need to comply by January 1, 2025.

What kind of details must be reported in FinCenBOI?

Companies must furnish data like their full name, business address, IRS taxpayer identification number (TIN), along with information about beneficial owners and
company applicants, including names, birthdates, addresses, and identification details from official documents like driver’s licenses or passports.

Non-compliance poses serious risks, with penalties reaching up to $10,000, two years of jail time, and $500 daily fines for willful defiance of BOI reporting requirements. For further insights into the Corporate Transparency Act, visit here.

Remember, for specific advice tailored to your circumstances, it’s best to consult legal counsel or a professional advisor. If you have any questions about how this affects your business, feel free to reach out to the Fractional Tax Team. Contact

Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.

Companies required to report are called reporting companies. There are two types of reporting companies:

Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.

A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report.

Yes, 23 types of entities are exempt from the beneficial ownership information reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies like banks, credit unions, Insurance companies and others.

No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and updated or corrected BOI reports as needed.

A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests.

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