New Federal Reporting Requirement for Beneficial Ownership Information (BOI)

Beginning on January 1, 2024, the Corporate Transparency Act went into effect, requiring many companies in the United States to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.

Who Has to Report

Companies required to report are called “reporting companies”. Reporting companies may have to obtain information from their beneficial owners and report that information to FinCEN.

Your company may be a reporting company and need to report information about its beneficial owners if your company is:  Corporations (C or S), Limited Liability Companies (LLCs), Limited Partnerships, Single Member LLCs and other entities that file formation papers with a state’s Secretary of State’s office (or similar government agency).  Newly formed reporting companies must file a report with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) providing specified information regarding the entity’s “beneficial owners” within 90 days following formation ore registration.

Entities in existence prior to January 1, 2024, have until January 1, 2025, to file these reports.

Beneficial Owners

A Covered Company will be required to report beneficial ownership information (“BOI”) regarding any “beneficial owner” defined as any individual who directly or indirectly has “substantial control” over a Covered Company or owns or controls at least 25% of a Covered Company.  The term substantial control includes persons with operating control such as senior officers, partners, members, managers, directors, trustees, and others, as well as persons who have substantial control over such persons or the right to remove them from office.  Information is also required regarding individuals who file or are responsible for forming or registering a Covered Company.

Information Required to be Reported

BOI includes the name, date of birth, current address and copies of identification documents such as a passport or driver license, to a new government database with respect to each beneficial owner.

Exempt Entities

The Reporting Rule exempts twenty-three (23) specific types of entities from the reporting requirements. An entity that qualifies for any of these exemptions is not required to submit BOI reports to FinCEN.

  1. Securities reporting issuer
  2. Governmental authority
  3. Bank
  4. Credit union
  5. Depository institution holding company
  6. Money services business
  7. Broker or dealer in securities
  8. Securities exchange or clearing agency
  9. Other Exchange Act registered entity
  10. Investment company or investment adviser
  11. Venture capital fund adviser
  12. Insurance company
  13. State-licensed insurance producer
  14. Commodity Exchange Act registered entity
  15. Accounting firm
  16. Public utility
  17. Financial market utility
  18. Pooled investment vehicle
  19. Tax-exempt entity
  20. Entity assisting a tax-exempt entity
  21. Large operating company
  22. Subsidiary of certain exempt entities
  23. Inactive entity

The “large operating company” exemption includes companies with over 20 full time employees and over $5 million in annual gross receipts. The “inactive entity” exemption applies to companies not engaged in active business activities. However, please note that analysis under each exemption is complex and requires careful consideration of all facts and circumstances.


Failure to report information and timely update any changed information can result in significant fines of up to $500 per day until the violation is remedied, or if criminal charges are brought, fines of up to $10,000 and/or two years imprisonment. These penalties can be imposed against the beneficial owner, the entity, and/or the person completing the report.

Deadlines for Filing Reports

Companies formed during calendar year 2024 are required to comply with the new information requirements within 90 days of their formation.

Companies formed prior to calendar year 2024 are required to comply by January 1, 2025.

Additionally, companies are required to keep the government informed of any changes to their beneficial ownership or any other required information (for example, changes to the name or address of the company). Companies have 30 days to provide updated information.

The analysis required by these new FinCEN rules is complex. This summary is intended to provide a general overview and does not constitute legal advice and may not be relied upon to address any specific situation.   Former IRS attorneys of Holtz, Slavett & Drabkin, APLC are ready to assist you with the analysis of the FinCEN requirements and Beneficial Ownership Information reporting. You can reach us at (310) 550-6200.