Jan. 1 Triggers New Requirements for Beneficial Ownership Information (BOI) Reporting

In 2021, Congress enacted the Corporate Transparency Act. This law creates a Beneficial Ownership Information (BOI) reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.

New requirements start Jan. 1, 2024

Beginning on January 1, 2024, many companies in the U.S. will have to report information about their beneficial owners. Beneficial owners are the individuals who ultimately own or control the company. Companies must report will report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury. 

Generally speaking, companies structured as corporations, LLCs, and those created by filing a document with the secretary of state or similar office under the law of a State or Indian tribe are likely required to report BOI. For the organization, BOI information includes legal names, DBAs, addresses, TIN, and other basic information.

The information being collected for individual beneficial owners helps establish the identity of the individual. It includes birth date, residential address, and identifying number and image of government-issued documentation (driver’s license, passport, etc.). For reporting entities, a beneficial owner is defined as an individual who either directly or indirectly:

• Exercises substantial control over the reporting company (i.e. senior officer, important decision makers, individuals with appointment or removal authority), or
• Owns or controls at least 25% of the reporting company’s ownership interests (i.e. equity, stock, voting rights, convertible instruments, capital or profit interest, options, and the like)

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