An Update and Reminder on Beneficial Ownership Requirements (BOI)

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

What is BOI?
In 2021, Congress passed the Corporate Transparency Act (CTA) on a bipartisan basis. This law creates a new beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

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.

There are 23 types of entities that are exempt from the reporting requirements. Carefully review the qualifying criteria before concluding that your company is exempt.

Answers to Questions
FinCEN expects that many reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using FinCEN’s guidance. The Beneficial Ownership FAQ section includes more than 100 questions and answers.

Filing Guidance
FinCEN (Financial Crimes Enforcement Network) launched the BOI E-Filing website for reporting beneficial ownership information on January 1, 2024. There are no fees charged for filing your beneficial ownership information report to FinCEN.

• A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.
• A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.
• A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

Remember, any time there is a change to the ownership entity, such as a change in name, address or ownership, the BOI needs to be updated.

Update on the Court Ruling
On March 1, 2024, the U.S. District Court for the Northern District of Alabama, in National Small Business United, d/b/a National Small Business Association, et al., v. Yellen, et al., ruled that the CTA is unconstitutional, finding that the legislation, including its BOI disclosure requirements, exceeds the Constitution’s limits on the powers of Congress.

However, this ruling applies only to the plaintiffs in that lawsuit, essentially, the National Small Business Association and its members as of March 1, 2024. Therefore, there is no nationwide injunction in effect.

Shortly after the court’s ruling, the Treasury Department issued a notice making clear that except for the plaintiffs in that lawsuit, “all reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN’s regulations.”