New Tax Law 2024

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury whose purpose is to combat financial crimes such as money laundering.  In 2021, the Corporate Transparency Act (CTA) was enacted as part of the Anti-Money Laundering Act of 2020. This law requires each U.S. and foreign company to file a Beneficial Ownership Information (BOI) Report identifying its beneficial owners or risk non-reporting penalties. Companies who willfully provide false information (including a false or fraudulent identifying photograph or document) or neglect to report by the filing deadline can face civil BOI penalties of up to $591 for each day that the violation continues or has not been remedied. In addition, they can be fined up to $10,000and/or face up to 2 years of imprisonment. Here is the website with more information https://www.fincen.gov/boi

Corporations, LLCs, and other entities subject to the CTA are called “reporting companies.” People who form new reporting companies must file a beneficial ownership information (BOI) report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) within 90 days of forming the company. The owners of reporting companies created before 2024 must also file a BOI report, but they have until January 1, 2025. Some businesses are exempt from filing—for example, large operating companies with over 20 employees and $5 million in income. There are other, more narrow exemptions as well. Most small, closely held LLCs and corporations that hold real estate or operating businesses will need to file.

The BOI report must contain the name, the birth date, the address, an ID number, and image said ID for each “beneficial owner” of the reporting company. A beneficial owner is someone who (1) owns or controls at least 25 percent of the company or (2) exercises “substantial control” over the company.  The BOI report is filed online at a new federal database called BOSS (an acronym for Beneficial Ownership Secure System). There is no filing fee.  Government law enforcement and security agencies will use the data from BOI reports to help combat money laundering, tax evasion, terrorism, and other crimes. It will not be available to the public.

Naturally, people have lots of questions about the BOI report filing requirements—for example:

• Do you have to file a BOI report if you own a single rental property in an LLC? (Yes)
• Do you have to file 10 BOI reports if you own 10 LLCs? (Yes)
• Can certified public accountants, enrolled agents, and other non-lawyers file BOI reports for clients without running afoul of unauthorized practice of law rules? (Unclear)
• Are registered agents responsible for filing the BOI report? (No)
• Do the sole-proprietors have to file? (No)
• Do I need to list a street address in the BOI report? (Yes)
• Do I need to list my Social Security Number in the BOI report? (No)
• Do I need to list my attorney in the BOI report? (Maybe)
• Must I file an updated BOI report if a beneficial owner leaves the company? (Yes)
• Do I have to list my minor child in a BOI report? (No)

We’ve provided some questions and answers above. If you require further information or have additional questions on this new BOI Reporting, please contact our offices at (616) 742-0400.