BOI Reporting Action Required & Response Requested

May 29, 2024

To Our Valued Clients:

We hope all is well. Below is an important message from Mike Locricchio, Joe Serra, and Steve Johnson.

Many of you may already be aware of the new Corporate Transparency Act (“CTA”) requirement that became effective January 1, 2024. The CTA requires the filing of a Beneficial Ownership Information Report (“BOIR”). The report discloses to the government the beneficial ownership information (“BOI”) of the individuals who ultimately own or control certain entities, primarily business entities (such as LLCs, corporations, etc.).

BOIR filing is a one-time filing requirement (not annual) and must be updated if there are any changes such as business address, ownership, owner(s) address, etc. There is no filing fee. The report must be filed online.

Filing is required for all entities you own or control that are not exempt from filing. Those of you with multiple entities must file separately for each entity; entities which are themselves owned by entities must also file. Entities organized both in the U.S. and outside the U.S. may be subject to the reporting requirement. There are twenty-three types of entities that are exempt from BOI filing requirements. Please note that single-member limited liability companies (LLC’s) are not exempt from filing. You can get more information from the BOI Reporting FAQs enclosure and at the BOIR website: https://boiefiling.fincen.gov.

Owners of 25% or more of the equity in the entity(ies) and/or individuals who exercise “substantial control” over the entities must be disclosed. These owners/individuals could be held responsible for failure to file the BOIR.

Penalties for not complying with the BOI reporting requirement can result in criminal and civil penalties of $591 per day and up to $10,000 with up to two years of jail time.

The BOIR filing deadline depends on when an entity was created/registered or when changes occur:

-Entities created/registered on or prior to December 31, 2023 — must file report by January 1, 2025.

-Entities created/registered in 2024 — must file report within 90 calendar days of creation/registration.

-Entities created/registered on or after January 1, 2025 — must file report within 30 calendar days of creation/registration.

-Entities with changes to previously reported information or that discover inaccuracies in a previously filed report — must file an updated/corrected report within 30 days.

We are strongly encouraging clients to prepare and file the BOIR information online yourself due to the online reporting being easy to fill out using the free e-filing system at the website: https://boiefiling.fincen.gov/boir/html .

If you would like us to handle the filing for you, we require a signed formal engagement letter for this service, which we will provide to you upon request. Please call or text our office at (248) 822-9010 to request the engagement letter and we will also send you a BOIR Required Information Checklist to help you provide us the necessary information. Fees for our services will be billed at our standard hourly billing rates principally based upon the amount of time required for us to obtain the necessary information from you and to complete the BOIR filing services online.

If we do not hear from you, we will assume you are filing the BOIR for your entity(ies) and we will have no responsibility for your failure to submit, correct, amend, or re-submit any report as required under the CTA.

Sincerely,

Metzler Locricchio Serra & Company, P.C.

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Beneficial Ownership Information (BOI) Reporting FAQs

The Corporate Transparency Act (“CTA”) was enacted into law in 2021. The CTA requires the disclosure of the beneficial ownership information (otherwise known as “BOI”) of certain entities from people who own or control a company. Under the CTA, BOI reports will not be filed with the IRS, but with Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury.

The CTA is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. The intent of the BOI reporting requirement is to help US law enforcement combat money laundering, the financing of terrorism and other illicit activity.

What entities are required to comply with the CTA’s BOI reporting requirement?

Entities organized both in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Domestic companies required to report include corporations, limited liability companies (LLCs) or any similar entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.

Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.

Are there any exemptions from the filing requirements?

Inactive companies are exempt from BOI reporting if they meet all of the following requirements:

-Must have been in existence on or before January 1, 2020.

-Is not engaged in an active business.

-Is not owned by a foreign person; and

-Has not experienced a change in ownership in the preceding 12-month period.

Large operating entities are exempt from BOI reporting if they meet all of the following requirements:

-Employ more than 20 people in the U.S.;

-Have reported gross revenue (or sales) of over $5M on the prior year’s tax return; and

-Be physically present in the U.S.

There are twenty-three categories of exemptions. Included in the exemptions list are publicly traded companies, banks and credit unions, securities brokers/dealers, certain public accounting firms, tax-exempt entities, and certain inactive entities, among others. Note that these are not blanket exemptions and many of these entities are already heavily regulated by the government and thus already disclose their BOI to a government authority.

When must companies file?

There are different filing timeframes depending on when an entity is registered/formed or if there is a change to the beneficial owner’s information.

-Entities created/registered after 2024 — must file within 30 calendar days of receiving notice of the company’s creation or registration.

-Entities created/registered during 2024 – must file within 90 calendar days of receiving notice of the company’s creation or registration.

-Entities created/registered before 2024 — must file by January 1, 2025.

-Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days.

Who is a beneficial owner?

Any individual who, directly or indirectly, either:

-Exercises “substantial control” over a reporting company, or

-Owns or controls at least 25 percent of the ownership interests of a reporting company

An individual has substantial control of a reporting company if they direct, determine or exercise substantial influence over important decisions of the reporting company. This includes any senior officers of the reporting company, regardless of formal title or if they have no ownership interest in the reporting company.

The detailed CTA regulations define the terms "substantial control" and "ownership interest" further.

What sort of information is required to be reported?

Companies must report the following information: full name of the reporting company, any trade name or doing business as (DBA) name, business address, state or Tribal jurisdiction of formation, and an IRS taxpayer identification number (TIN).

Additionally, information on the beneficial owners of the entity and, for newly created entities, information on the company applicants of the entity is required. This information includes — name, birth date, address, and unique identifying number and issuing jurisdiction from an acceptable identification document (e.g., a driver’s license or passport) and an image of such document.

Understand your reporting requirement.

Penalties for willfully not complying with the BOI reporting requirement can result in criminal and civil penalties of $591 per day and up to $10,000 with up to two years of jail time. Furthermore, if any person knowingly discloses or inappropriately uses BOI they may be fined $591 per day up to $250,000 and imprisoned for up to 5 years.

You can prepare and file this information yourself online with the Financial Crimes Enforcement Network (FinCEN), an agency of the Department of Treasury. The e-filing system is available at this website - https://boiefiling.fincen.gov/.

Additional resources via quick links:

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