Kewal Krishan & Co, Chartered Accountants
2024 BOI Reporting with FINCEN

Background

The Corporate Transparency Act (CTA) was integrated into the National Defense Act for the fiscal year 2021. Its mandate requires millions of entities to furnish their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).

Who Must Report

Reporting obligations extend to both domestic and foreign entities that have submitted formation or registration documents to a U.S. state or Indian tribe, except if they fall under one of the 23 specified exemptions. Notably:

  1. Large operating entities meeting these criteria:
    • Employing more than 20 U.S.-based employees,
    • Recording gross revenue or sales exceeding $5 million in the previous year’s federal income tax return, and
    • Maintaining a physical office within the U.S.
  2. Publicly traded companies registered under Section 102 of the Sarbanes-Oxley Act are also exempt.

Due Dates

Entities established or registered before 2024 have until January 1, 2025, to file their Beneficial Ownership Information (BOI) report. For those created or registered after 2023, the deadline for their BOI report is within 30 days.

However, FinCEN is considering extending the 30-day window to 90 days for entities formed or registered after 2023 but before 2025. Entities established after 2024 will still need to submit their initial BOI reports within 30 days of creation or registration.

Furthermore, if reporting entities encounter changes in previously provided information or identify errors in earlier filed reports, they are required to submit a new report within 30 days.

Information Required to be Reported

The entity is required to disclose specific information:

  • Its legal name and any trade or DBA names used.
  • Business address details.
  • State or tribal jurisdiction where it’s formed or registered.
  • IRS Taxpayer Identification Number.

Moreover, each reporting entity must provide detailed information about its beneficial owners (and for newly established entities, its applicant(s)):

  • Names
  • Dates of birth
  • Addresses
  • Unique identifying numbers along with the issuing jurisdiction from an acceptable identification document, including an image of that document.

Severe Penalties for Noncompliance

  • Civil Penalties: Fines may amount to $500 per day for each instance of ongoing violation.
  • Criminal Penalties: These encompass a $10,000 fine and/or a potential two-year prison term.

Summary of BOI Report Format

Here’s a condensed overview of the BOI report: Filing Details:

  1. Filing Types: a. Initial report b. Correction of prior report c. Update of prior report d. New exempt entity
  2. Date of Preparation

The report is divided into two main sections: Part I – Reporting Company Information Part II – Company Applicant Information

Within Part II, Line 20 requires submission of one of the following: a. State-issued driver’s license b. State/local tribe-issued ID c. U.S. passport d. Foreign passport z. Unknown

Additionally, Line 31 mandates providing the document’s number.

Line 32 requests the country or jurisdiction that issued the identification document, if known. If the document is issued by a U.S. state, specify that state when indicating the United States. If this information is not available, mark “z.”

Line 33 instructs attaching an image of the identification document, with guidance provided for the upload process.

Part III – Beneficial Owner Information Line 36 in this section requires the Beneficial Owner’s FinCEN ID. If unavailable, provide:

  • Full legal name
  • Date of birth
  • Residential address
  • Type of identification and issuing jurisdiction.

The details required here are similar to those needed in Part II for company applicants.

More Guidance

FinCEN has provided additional guidance regarding BOI reporting requirements, including updated FAQs (May 11, 2023), client-specific BOI FAQs (May 11, 2023), a client letter about BOI matters (Oct. 18, 2023), and a compliance guide tailored for smaller entities.

However, it’s important to exercise caution as it’s uncertain whether a CPA’s involvement in preparing or filing these BOI reports could be considered an unauthorized practice of law. Seeking guidance from the appropriate authorities is advisable for clarification on this matter.

How we can help?

Our COO Anshul Goyal has vast experience on US taxation and International Tax Reporting requirements with the IRS, holding AICPA international tax certifications and has handled complex reporting requirements with the IRS making the US entities compliant on these critical reporting requirements.

Have Questions? Reach Anshul Goyal at anshul@kkca.io or call him at +1 3235225584 for expert guidance and support. Let’s optimize your tax strategy for success!

Disclaimer: Please note that the information provided in this article does not constitute professional advice. The contents are intended for general information purpose only and It’s always recommended to seek counsel from a qualified professional or attorney familiar with your specific business situation before making any decisions.

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