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Beneficial Ownership Information Reporting Requirements

By Kenneth H. Bridges, CPA, PFS February 2024

If you own or control at least 25% of the ownership interests of a corporation, limited partnership, limited liability company or similar entity, or directly or indirectly exercise “substantial control” over such an entity, then it is very important that you be familiar with the Beneficial Ownership Information Reporting requirements which just took effect January 1, 2024.

Concerned that bad actors use legal entities to aid in tax fraud, money laundering, human trafficking, drug trafficking, securities fraud, financing of terrorism, and other criminal activities, Congress passed legislation in 2021 (the Corporate Transparency Act, or CTA) requiring substantially all legal entities to file a Beneficial Ownership Information Report (BOIR) with the Financial Crimes Enforcement Network (FinCEN). While the legislation was enacted in 2021, it first takes effect in 2024, and FinCEN just started accepting the reports on January 1, 2024.

Penalties for willful failure to file can range from $500 per day (up to $10,000) to 2 years in prison.

The required filing dates for an initial filing are as follows:

  • For entities formed before 2024, the initial filing must be made by January 1, 2025.
  • For entities formed during 2024, the initial filing must be made within 90 days of formation.
  • For entities formed after 2024, the initial filing must be made within 30 days of formation.

An updated filing must be made within 30 days of any change to the required information about the company or its beneficial owners (e.g. any change in owners, change in officers, or changes to a beneficial owner’s name or address may require the filing of an updated BOIR).  A minor child owner attaining the age of majority is a change requiring an updated BOIR to be filed (since minor children are exempt from the reporting requirement).  A termination or dissolution of a company, however, does not require reporting.

A reporting company is any corporation, LLC, or similar entity created by filing a document with a secretary of state, or an entity created under the laws of a foreign country if the entity has registered to do business in the U.S.  There are 23 types of entities which are exempt from BOIR (presumably under the assumption that these entities are already subject to sufficient reporting requirements).  The exempt entity types are:

  1. Securities reporting issuer (i.e. publicly traded company)
  2. Governmental authority
  3. Bank
  4. Credit union
  5. Depository institution holding company
  6. Money service 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

“Large operating company” (exemption category number 21) means an entity which employs more than 20 full time employees in the U.S., has an operating presence at a physical office in the U.S., and filed a U.S. income tax return for the previous year reflecting more than $5,000,000 in U.S. sourced gross receipts.

It is important to note that the above exemptions are not nearly as broad as the brief description provided for each might imply.  For example, the “accounting firm” exemption applies only if the accounting firm is registered with the PCAOB (which most small accounting firms are not), the “investment company” exemption applies only to those investment companies which are registered with the SEC, and the “inactive entity” exemption applies only to entities which were in existence as of 1/1/20, are not engaged in an active business, have no foreign ownership, have not experienced an ownership change in the prior 12 months, have not sent or received funds in excess of $1,000 in the preceding 12 months, and do not hold any assets whatsoever.  Accordingly, it is imperative that before concluding you meet an exemption you review carefully the rules set forth https://www.fincen.gov/boi and discuss with your legal counsel.

The Beneficial Ownership Information Report (BOIR) is completely separate from any income-tax related filing.  It is filed on-line at https://www.fincen.gov/boi.

The information which must be reported in the BOIR includes:

For the Reporting Company

  • Legal name and address of the company
  • Any DBA for the company
  • Country and state of formation
  • EIN (or SSN if this is a single member LLC for which owner is using SSN instead of an EIN)


For Each Beneficial Owner

  • Full legal name
  • Date of birth
  • Current address
  • Social security number
  • A photo of driver’s license, passport or other government-issued identification card

A “beneficial owner” for these purposes is anyone who owns or controls at least 25% of the “ownership interests” of the company, and also anyone who exercises “substantial control” over the entity.

“Ownership interest” is defined very broadly to include equity, stock, voting rights, capital or profit interest, convertible instruments, options, and any other instrument, contract or mechanism used to establish ownership.

“Substantial control” includes senior officers of the company, individuals who have the authority to appoint or remove certain officers or a majority of the directors, individuals who are “important decision makers”, and individuals who have any other form of substantial control over the entity.

There are exceptions to the above “beneficial owner” definitions for minor children (until they reach the age of majority), nominees, employees who are not senior officers, inheritors, and creditors.

In a fairly simplistic situation (e.g. an entity with one owner who is its sole decision maker), there might be only one “beneficial owner” to report, whereas for entities with multiple owners and decision makers there may be multiple beneficial owners to report on the BOIR.

As noted above, you can file the BOIR on-line at https://www.fincen.gov/boi.  It is probably worth taking a moment to first obtain a FinCEN ID at https://fincenid.fincen.gov/landing. Once you have a FinCEN ID, you can insert this unique number in lieu of typing in your name, address, date of birth, SSN, each place such is otherwise required. In particular, before attempting to file a BOIR, note the information outlined above which is necessary for each “beneficial owner” (including a photo of an identification card like their driver’s license).

Kenneth H. Bridges, CPA, PFS is a partner with Bridges & Dunn-Rankin, LLP, an Atlanta-based CPA firm.

This article is presented for educational and informational purposes only, and is not intended to constitute legal advice.  The article provides only a very general summary of complex rules.  For advice on how these rules may apply to your specific situation, contact your legal counsel.