The Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, on September 18th released its “Small Entity Compliance Guide” to help small businesses comply with impending beneficial ownership requirements.
“Starting in 2024, many entities created in or registered to do business in the United States will be required to report information about their beneficial owners—the individuals who ultimately own or control a company—to FinCEN. The Guide is intended to help businesses determine if they are required to report their beneficial ownership information to FinCEN,” states the announcement on the release of the Guide.
The announcement on the beneficial ownership information (or BOI) also states the following:
Among other things, the Guide:
- Describes each of the BOI reporting rule’s provisions in simple, easy-to-read language;
- Answers key questions; and
- Provides interactive checklists, infographics, and other tools to assist businesses in complying with the BOI reporting rule.
The FAQ on BOI is here.
The BOI reports will seek to identify the individuals who ultimately own or control a company. FinCEN cannot accept these reports before January 1, 2024.
The basic impetus behind these reports is to identify “bad actors” who might be hiding ill-gotten gains in businesses where it is not clear who the owners of the entity are.
The rule applies to essentially any business that is organized, registered or incorporated in a state, but there are exemptions.
From Eide Bailly:
There are numerous exemptions—meaning an entity is not a ‘reporting company’—including:
- Banks, bank holding companies, credit unions, governmental entities, publicly traded companies, insurance companies, public accounting firms, and tax-exempt entities.
- ‘Large operating companies’ that have a physical office in the U.S., more than 20 U.S.-based, full-time employees, and more than $5 million of gross receipts reported on a prior federal tax return.
Beneficial ownership requirements were included in the Corporate Transparency Act, which was enacted in 2021 as part of a larger bill called the "National Defense Authorization Act."
FinCEN will also provide additional guidance on how to submit beneficial ownership information soon, according to the announcement.
FinCEN’s BOI Webpage is here.