The Importance of Beneficial Ownership Information 2

Beneficial Ownership Information (BOI) is essential for identifying the individuals who ultimately own or control a legal entity. This information is crucial for law enforcement agencies to combat financial crimes by tracing the real individuals behind corporate structures.

New BOI Reporting Requirements

As of January 1, 2024, the Financial Crimes Enforcement Network (FinCEN) has mandated that most legal entities, both domestic and foreign, must report their BOI. The specific filing deadlines are as follows:

• Existing entities: Must file a BOI report by January 1, 2025.
• Newly formed entities: Must file a BOI report within 30 days of registration or formation.

Exemptions and Penalties

While most entities are subject to these requirements, there are specific exemptions for certain types of entities, as outlined in the Small Entity Compliance Guide provided by FinCEN.

Failure to comply with these requirements can result in strict penalties, including civil fines of up to $500 per day of non-compliance. Willful non-compliance or unauthorized disclosures may also lead to criminal penalties.

Seeking Professional Assistance

Navigating the complexities of BOI reporting can be challenging. It’s highly recommended to seek guidance from experienced tax professionals to ensure compliance and avoid potential penalties.

Key Points to Remember:

• Understanding Beneficial Owners: Beneficial owners are individuals who exert significant control over an entity or own or control at least 25% of its ownership interests.
• Substantial Control: This includes factors like serving as a senior officer, having the authority to appoint or remove officers, being a key decision-maker, or exercising other forms of substantial control.
• Ownership Interests: These can include equity, stock, voting rights, capital or profit interests, convertible instruments, options, or other mechanisms that establish ownership.
• Reporting Requirements: Entities must report the names, addresses, and ownership percentages of beneficial owners.
• Penalties for Non-Compliance: Failure to report BOI can result in significant financial penalties and potential criminal charges.

By understanding these requirements and seeking professional assistance, you can ensure your entity’s compliance with the new BOI regulations and avoid potential legal consequences.