BOI Requirement for FinCEN: Urgent Compliance for Businesses—What You Need to Know Now

Oct 15, 2024 | Tax Information

The clock is ticking for businesses to meet the Beneficial Ownership Information (BOI) reporting requirements set by the Financial Crimes Enforcement Network (FinCEN). If your company falls under this mandate, the time to act is now. The Corporate Transparency Act (CTA), which introduced these requirements, is already in motion, and the consequences of non-compliance could be severe—ranging from hefty fines to potential jail time.

In this urgent guide, we’ll break down what the BOI requirement is, who it affects, the deadlines for compliance, and the steep penalties you could face if you fail to act quickly.

What is the BOI Requirement?

The BOI requirement mandates that certain businesses must disclose detailed information about their beneficial owners—those individuals who own or control 25% or more of the company. This rule is aimed at increasing transparency in corporate structures and reducing opportunities for financial crimes such as:

  • Money laundering
  • Tax evasion
  • Terrorism financing

FinCEN is enforcing these rules to make sure bad actors can no longer hide behind anonymous entities. But here’s the catch—if you don’t report on time, you’ll be subject to significant penalties.

Why You Need to Act Now

The BOI requirement is not something you can ignore or delay. Here’s why:

  1. Compliance Deadlines Are Imminent:
    • Existing businesses registered before January 1, 2024, must report their beneficial ownership information no later than January 1, 2025.
    • Newly formed businesses starting after January 1, 2024, must comply immediately upon registration.

These deadlines are fast approaching, and failing to meet them can lead to significant financial penalties.

  1. Heavy Fines for Late or Non-Compliance:
    • Failing to file your BOI report on time can result in civil penalties of $500 per day.
    • If your business is found to have willfully provided false or incomplete information, the stakes rise even higher. Criminal penalties can include fines of up to $10,000 and even prison sentences of up to two years.

With these penalties in place, the cost of not complying far outweighs the effort it takes to submit the necessary information.

Who Must Comply with the BOI Requirement?

The BOI reporting requirement applies to a broad range of domestic and foreign entities that are registered to conduct business in the U.S. This includes:

  • Corporations
  • Limited Liability Companies (LLCs)
  • Partnerships and similar entities

However, there are 23 categories of exemptions, which primarily include:

  • Publicly traded companies
  • Banks and financial institutions
  • Insurance companies
  • Governmental entities
  • Inactive entities – Prior to 1-1-2024

If your business does not fall under one of these exempt categories, you are required to submit a BOI report to FinCEN.

What Information Must Be Reported?

When filing your BOI report, you must provide FinCEN with detailed personal information about each beneficial owner, including:

  • Full legal name
  • Date of birth
  • Residential address
  • Unique identification number from an official government document, such as a passport or driver’s license.

This information is used to ensure transparency in business ownership and to prevent misuse of legal entities for illegal activities. If your ownership structure changes, you have 30 days to report these updates to FinCEN.

Consequences of Missing the Deadline

Missing the BOI reporting deadline could be disastrous for your business. The penalties are harsh, and FinCEN has made it clear that they will enforce them strictly. Here’s what you’re facing if you fail to comply:

  • Civil Penalties: If you don’t submit the required information on time, you will incur fines of $500 per day until you correct the filing. These fines can accumulate quickly, potentially crippling your business financially.
  • Criminal Penalties: Willfully providing false or misleading information—or failing to correct a submission—can lead to criminal charges, including up to $10,000 in fines and up to two years in prison.
  • Reputation Damage: Non-compliance can also damage your company’s reputation, especially with investors, partners, and clients who expect you to meet your legal obligations.

How to Ensure Compliance with the BOI Requirement

To avoid these devastating penalties, your business needs to take immediate action to comply with FinCEN’s BOI requirements. Here’s how:

  • Identify Your Beneficial Owners: Review your company’s ownership structure and identify all individuals who meet the 25% ownership or control threshold. Don’t delay in gathering this information—it takes time, especially for entities with complex structures.
  • Set Up a Reporting System: Ensure your company has a streamlined process for collecting and verifying beneficial ownership information. Having this in place will help you meet the reporting deadlines and make future updates easier.
  • File on Time: Contact Tax Americano, LLC to file your report now. Make sure it’s accurate and submitted before the deadline. Missing even one day could trigger daily fines.
  • Consult Tax Americano’s Experts: If you’re unsure whether your business qualifies for an exemption or you have a complex ownership structure, seek guidance from our compliance professionals. Getting expert help can save you time and ensure you don’t accidentally miss any important details.

FAQs about BOI Requirements and Compliance Deadlines

  1. When is the deadline for submitting BOI reports to FinCEN?
  • For companies formed before January 1, 2024, the deadline to submit BOI information is January 1, 2025.
  • For newly registered entities starting from January 1, 2024, thru December 31, 2024, the BOI report must be submitted within 90 days of registration.
  • For newly registered entities starting from January 1, 2025, the BOI report must be submitted within 30 days of registration.

 

  1. What happens if my business misses the reporting deadline?
  • Late submissions are subject to civil penalties of $500 per day until the report is filed. Willfully failing to comply can result in criminal fines up to $10,000 and even prison time.
  1. How can I avoid penalties for non-compliance?
  • The key is to act now—review your corporate structure, gather the necessary ownership information, and ensure it’s filed by the deadline. Consulting with Tax Americano’s compliance experts can also help you avoid costly mistakes.
  1. Who is considered a beneficial owner?
  • A beneficial owner is any individual who owns or controls 25% or more of the company or has significant influence over company decisions.
  1. What entities are exempt from BOI reporting?
  • Some entities, such as publicly traded companies, banks, and governmental bodies, are exempt from BOI reporting requirements.
  1. What information must be included in a BOI report?
  • The report must include the beneficial owner’s full name, date of birth, residential address, and unique identification number from a government-issued document.

Final Thoughts: Don’t Wait—Ensure Compliance Today

The BOI reporting deadline is approaching faster than many businesses realize, and the penalties for non-compliance are severe. With civil penalties accruing at $500 per day and potential criminal charges on the line, it’s critical that your business acts now to ensure full compliance with FinCEN’s BOI requirements.

Take the necessary steps today: review your ownership structure, collect accurate information, and submit your BOI report before the deadline. The consequences of inaction are far too great to ignore.