BOI Reports Due Soon for Many Companies

Written By Ryan Layton

About a year ago, I wrote an article (which you can read here) meant to raise awareness about a new law called the Corporate Transparency Act (the “Act” or the “CTA”) which took effect on January 1, 2024, imposing a new reporting requirement on many businesses.  Today, I want to cover the CTA again and remind people that an important deadline under the Act is fast approaching.

First, let’s quickly review what the CTA is.  The CTA requires businesses to file a Beneficial Ownership Information Report (“BOI Report”) with the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”).  The information reported on these BOI Reports includes (among other things) information about a company’s owners and other people who exercise control over the company.  This information is gathered to help FinCEN combat money laundering, fraud, the financing of terrorism, and other financial crimes.  In general, the companies that have to file a BOI Report are companies organized as LLCs, corporations, and other entity types whose creation requires documents to be filed with a secretary of state’s office.

So, when are these BOI Reports due?  The answer depends on when the company was created.  That said, many companies will be expected to file their BOI Report by January 1, 2025.  See below for a summary of how the date of a company’s formation affects its BOI Report due date:

  • Formed before January 1, 2024:  BOI Report due by January 1, 2025

  • Formed on or after January 1, 2024 but before Jan. 1, 2025:  BOI Report due within 90 days of formation

  • Formed on or after January 1, 2025:  BOI Report due within 30 days of formation

Here are a few more things to keep in mind regarding the BOI Report:

  • Not all companies have to file BOI Reports.  The Act provides twenty-three categories of organizations which are exempt from the Act’s reporting requirement.

  • In addition to requesting information on a company’s owners and other people in control, a BOI Report must include information on the company’s “applicants.”  These are the individuals who filed the documents that created the company that is filing the BOI Report.  These people may or may not have anything to do with the company beyond having assisted with its formation.  If the company hired lawyers to submit the company’s formation documents to the secretary of state, then those lawyers are the company’s applicants.

  • When the BOI Report asks about people who own or control a company, it’s looking for people who own at least 25% of the company or who exercise substantial control over it.  It’s possible to have substantial control over a company without owning a piece of it.  Senior officers (CEO, CFO, president, etc.), for example, may not have an ownership interest in a company (or they may own less than 25% of the company), but they certainly exercise substantial control.

  • Anyone listed on the BOI Report will be an individual.  This is where some BOI Reports will get complicated.  For example, imagine two companies – Company A and Company B – form Company C as part of a joint venture between the two original companies, each of which own 50% of Company C.  Company C’s BOI Report will not simply list Company A and Company B, but will instead list individuals who own or control Company A and Company B and who, therefore, indirectly own at least 25% of Company C or who exercise substantial control over it.  As an example, Individual X, who owns 70% of Company A, will need to be listed on Company C’s BOI Report because Individual X indirectly owns 37.5% of Company C.  Individual Y, who owns 25% of Company B indirectly owns just 12.5% of Company C, so Individual Y does not need to be listed on Company C’s BOI Report unless Individual Y is in a position where he exercises substantial control over Company C.

 

If your company was formed before January 1, 2024, then hopefully you have already filed your BOI Report.  If not (and assuming your company is not one of the twenty-three types of companies exempt from the filing requirement), then consider this your reminder that your BOI Report is due in two months!  For more information on BOI Reports and the CTA (and there is plenty to know, only some of which has been covered in my two blog posts), I have included links to some very helpful pages on FinCEN’s website.  If you still have questions or would like help filing a BOI Report, call or email The Law Office of Ryan A. Layton, PLLC to schedule a free consultation. 

The information contained in this blog post is intended only as general legal information and should not be construed as formal legal advice on any matter, nor should its presentation be construed as intent on the part of The Law Office of Ryan A. Layton, PLLC to form an attorney-client relationship with any user of this website.  For more information, please see this disclaimer.

Ryan Layton
Previous

General Powers of Attorney Explained
Next

What New Parents Should Know About Estate Planning