Penalties for Non-Compliance: What Happens If You Don’t File Your BOI Report?

Oct 25, 2024 | Tax Information

With the Corporate Transparency Act (CTA) now in effect, many U.S. businesses must submit Beneficial Ownership Information (BOI) reports. These reports, intended to improve transparency around business ownership, help fight financial crimes like tax evasion and money laundering. However, staying compliant is essential, as failing to file can lead to severe penalties that may impact your business’s financial health and reputation.

As an accounting firm, Tax Americano is dedicated to helping businesses avoid these risks and stay on top of their reporting obligations. Remember, “Failing to plan is planning to fail.” In this article, we’ll cover the potential consequences of missing BOI reporting deadlines and how you can ensure your business remains compliant with these new regulations.

1. What is the BOI Report and Who Must File It?

Under the Corporate Transparency Act, certain businesses must disclose their beneficial owners—individuals who own or control at least 25% of the company or hold significant decision-making power.

Entities required to file a BOI report include:

  • Corporations, LLCs, and other legal entities formed or registered in the U.S.
  • Foreign entities doing business in the U.S. (with a few exceptions).

Each report must list personal information for each beneficial owner, including full name, birth date, address, and identification numbers. Failing to submit this information or filing inaccurate details can result in severe penalties.

2. Civil Penalties for Late or Missing BOI Reports

The Financial Crimes Enforcement Network (FinCEN), which enforces BOI reporting, imposes financial penalties on companies that miss deadlines or submit incomplete information.

Civil penalties include:

  • Fines of up to $500 per day for each day the report is late.
  • Daily accumulation of fines means that even minor delays can result in significant penalties. For example, being 30 days late could result in a $15,000 fine.

For small businesses, these fines add up quickly, making it crucial to stay on top of filing requirements.

3. Criminal Penalties for Willful Non-Compliance

If the failure to file a BOI report is determined to be willful—meaning the business knowingly avoided compliance—the penalties escalate to criminal charges.

Criminal penalties for willful non-compliance include:

  • Fines of up to $10,000 for failing to file or submitting false information.
  • Imprisonment for up to two years for individuals responsible for the non-compliance.

This means that company officers or individuals responsible for filing the BOI report could face personal liability and jail time for intentional violations.

4. What Does “Willful” Non-Compliance Mean?

Willful non-compliance occurs when a business knowingly disregards the BOI reporting requirements or intentionally hides information about its beneficial owners.

Examples of willful non-compliance include:

  • Deliberately failing to file the BOI report despite knowing about the requirement.
  • Providing false information to FinCEN.
  • Attempting to conceal ownership or control structures.

If your business is uncertain about how to accurately report beneficial ownership, it’s critical to seek guidance from a qualified professional like Tax Americano to ensure compliance. “Failing to plan is planning to fail.”

5. How to Avoid BOI Reporting Penalties

Avoiding these penalties is straightforward with a proactive approach. Businesses should take several steps to ensure full compliance with BOI reporting requirements.

Steps to stay compliant:

  • Track your deadlines: Stay informed about when your BOI report is due.
  • Identify beneficial owners accurately: Take the time to properly identify all qualifying individuals.
  • Submit correct and complete information: Double-check names, addresses, and identification numbers for accuracy.

Following these steps will help you avoid costly penalties and remain in compliance.

6. What If You Miss the Deadline?

If your business has missed the BOI reporting deadline, the key is to act quickly to reduce potential penalties.

What to do if you miss the deadline:

  • File the report as soon as possible: Prompt filing can reduce accumulated fines.
  • Contact FinCEN: Reaching out can sometimes help mitigate penalties if you can explain the delay.
  • Review your compliance processes: Strengthen filing procedures to avoid future mistakes.

7. Why Staying Proactive is Key

The best way to avoid BOI penalties is by staying proactive and organized. Setting up internal systems to track and update beneficial ownership information is essential.

Proactive steps to avoid penalties:

  • Set reminders for filing deadlines.
  • Regularly review beneficial ownership details to keep them accurate.
  • Consult with professionals like those at Tax Americano to ensure you’re fully compliant.

By staying proactive, you can avoid penalties and keep your business protected. After all, “Failing to plan is planning to fail.”

8. How an Accounting Firm Like Tax Americano Can Help

The complexities of BOI reporting can be challenging for busy business owners. That’s where accounting firms like Tax Americano come in. We ensure all beneficial ownership information is properly documented and submitted on time.

How we can assist:

  • Reviewing your business structure to determine which individuals need to be listed.
  • Filing the BOI report on your behalf to meet deadlines and ensure accuracy.
  • Providing ongoing support to keep your business compliant with evolving BOI requirements.

Partnering with Tax Americano means you’re working with professionals who understand compliance requirements inside and out. “Failing to plan is planning to fail”—let us help you stay ahead.

Stay Compliant, Avoid Penalties

Failing to file your BOI report can result in daily fines and even criminal charges for intentional violations. With some planning and attention to detail, your business can stay on top of these requirements.

At Tax Americano, we’re here to help you navigate BOI reporting and ensure compliance. Don’t risk costly penalties—reach out today to learn how we can assist you in meeting your obligations. Remember, “Failing to plan is planning to fail.”