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Email: [email protected]
In an era where financial transparency is more important than ever, the Beneficial Ownership Information (BOI) reporting requirement stands as a critical element in the fight against illegal financial activities. The 2021 Corporate Transparency Act mandates that most entities disclose their beneficial owners’ details to the government. Let’s explore what this means for businesses and how it impacts the broader economic landscape.
What is Beneficial Ownership Information (BOI) Reporting?
BOI reporting requires companies to reveal details about individuals with significant control or ownership interests. This initiative, overseen by the Financial Crimes Enforcement Network (FinCEN), a part of the U.S. Treasury Department, aims to prevent the concealment of illegally obtained funds through complex business structures.
Who is Required to Report?
Generally, the requirement applies to:
An individual is a beneficial owner if they directly or indirectly control or own at least 25% of a company. However, there are twenty-three entities that are exempt, which include publicly traded companies, nonprofits, and certain large operating companies. To review all the exceptions, visit FinCEN’s Small Entity Compliance Guide.
Filing Requirements and Process
Entities must file their BOI report on FinCEN’s website. Examples of what the report must include are:
Deadlines and Compliance
The deadlines are as follows:
Failure to comply can result in significant penalties ($500 per day), including fines (up to $10,000) and potential criminal charges (up to two years).
The Impact on Businesses and the Economy
As for the broader implications, BOI will allow for:
The Role of Accountants versus Legal Advisors
Accountants can help with financial details for BOI filings, but the filing process itself is a legal matter. Therefore, businesses are encouraged to seek legal counsel for BOI compliance. If you need referral sources, please reach out to your accountant. LegalZoom is a low-cost third-party option that can help you file the report.
Be Aware of Scammers
FinCEN warns of recent fraud attempts targeting individuals and entities subject to BOI reporting. It’s been reported that letters and emails are being sent with phone numbers, websites, and QR codes that connect you to fraudulent sources. Please be careful that you’re filing directly on FinCEN’s website. If you do decide to enlist a third party, be sure it’s a trusted legal source.
Conclusion
In summary, the BOI reporting requirement marks a significant step in enhancing corporate transparency and combating financial crimes. Businesses must stay informed and proactive in complying with these regulations to avoid huge penalties.
For more detailed guidance, businesses should consult the resources and guides on FinCEN’s website and consider seeking legal advice for compliance assurance. For general BOI questions, please reach out to your accounting team.