Do you need to report your business to FinCEN?

Any corporation, limited liability company, limited partnership or any other entity that has to register with the states (such as the Secretary of State) must file with FinCEN (the Financial Crimes Enforcement Network), including any entities formed in prior years, no matter how long ago they were formed and no matter for what purpose they were formed, unless they are exempt (see below).

When do you need to file?

Any company that existed prior to January 1, 2024 has until January 1, 2025 to file with FinCEN. If you form an entity on or after January 1, 2024, you must file with FinCEN within 90 days of formation.

How do you file?

FinCEN has now published their Beneficial Ownership Information Report (“BOIR”) on their website: https://boiefiling.fincen.gov/fileboir. Once you have accessed the FinCEN website, you can choose to either download a pdf of the Report and submit it on line or file directly online with FinCen. Be sure to have your company name and other information (as described below) handy, including the tax identification number for your business, as well as photos of driver’s licenses or passports for those owners holding more than 25% of the equity in the business or individuals having substantial control. This information will need to be uploaded with your application.

What is a “FinCEN” I.D. number and do you need one?

If you are required to report more than one business entity with FinCEN, you may want to consider obtaining a FinCEN I.D. Number. This will allow you to upload your personal information only once no matter how many entities you are registering and you can substitute the personal identification information with your FinCEN I.D. Number. For more information visit this website where you can also begin the application process to obtain an I.D. Number: FinCEN ID | Financial Crimes Enforcement Network (FinCEN)

Is your business exempt from filing?

There are certain exemptions from this filing requirement such as public companies and businesses subject to certain government regulations. However, a private business that meets all of the following criteria will also be exempt: A business (i) with more than twenty (20) full time employees (per entity, not on a consolidated basis), (ii) domestic gross revenues of at least $5 million dollars based upon the tax return from for the prior year (including certain consolidated tax returns) and (iii) a physical office in the US. Again, it’s important to note that for an entity to be exempt from the CTA requirement, it must meet all of the requirements stated above.

Another important exemption is a dormant entity. A dormant entity must meet all of the following criteria: (i) an entity that existed on or prior to January 1, 2020, and (ii) is not engaged in an active business, and (iii) is not owned directly or indirectly by a foreign person, and (iv) has not sent or received funds in excess of $1000 in the preceding twelve months and (v) does not own any assets anywhere in the world. Again, an entity must meet all of these requirements to be considered “dormant”. The dormant entity exemption may allow many entities that were formed and abandoned from the burden of this filing.

What information do you need to file?

The company must disclose the identities of anyone who owns directly or indirectly 25% or more of the company or who exercises “substantial control” over the company. The information also includes the names of the owner(s), date of birth, address and a government issued i.d., such as a driver’s license which therefore will have your picture. Additionally for any entities formed beginning in 2024 the entity must also give certain information about the “company applicant” which would, for example, include a law firm or accounting firm that helped set up the company. Of course, you will have to file information about your company including the name, trade name, address, and tax identification number.

What are the penalties for not filing or late filing?

The penalties for not filing are steep: Five Hundred dollars per day up to a maximum of $10,000 and up to two years of imprisonment. Individuals who willfully provide false information are subject to fines of up to $500,000 and imprisonment of up to three years.

Do you have more questions? If so, you can refer to FinCEN’s “Frequently Asked Questions” page here: https://www.fincen.gov/boi-faqs#Top_section. If you need any assistance from us to make this important filing, please contact us.

If you have any questions or comments about this article, please contact Michael L. Solomon, Esq., msolomon@ssandplaw.com or at the address above.

© 2024 -Solomon, Steiner & Peck, Ltd

This newsletter is intended to provide general and practical information to assist the public in understanding legal issues. Legal advice should only be given when the lawyer and client have an opportunity to explore fully the factual circumstances related to the client’s situation as explained by the lawyer to the client.


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