What it Means for Your Small Business
Starting January 1, 2024, a new reporting requirement went into effect requiring millions of small businesses in the US to file a Beneficial Ownership Information (BOI) Report with the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). The IRS has been tasked with communicating the new reporting requirement.
Congress imposed this requirement with the passing of the Corporate Transparency Act. Every small business owner needs to know about this reporting requirement as non-compliance can result in severe penalties.
UPDATE: As you may know, some business owners have brought suit against the U.S. Secretary of the Treasury challenging the authority they have to enforce BOI requirements under the Corporate Transparency Act. In these specific court cases, the named business has challenged the legality or constitutional authority of the BOI requirement, however, at this time there has been no ruling suspending the BOI reporting requirement for the majority of small businesses.
ATBS will continue to keep an eye on any further updates and make announcements when applicable; however, for the time being, our advice to our clients is to adhere, where appropriate, to the new reporting rules in order to avoid all fees that may be assessed for not doing so.
Purpose
Every corporation, LLC, or other entity created under state law is required to file a BOI report, even if that entity is not required to file a separate tax return with the IRS. This means that for all clients of ATBS who have an EIN, even if you only report that income on a Schedule C on your individual return, you are required to file a BOI report.
There are a few exemptions but unfortunately, none of the industry exemptions apply to transportation except for the “large operating company” exemption. A “large operating company” is an entity that (1) employs more than 20 full-time employees in the US, (2) has an operating presence at a physical office in the US, and (3) has filed a federal income tax or informational return in the US for the previous year with greater than $5 million in gross receipts.
The exemption for inactive entities is still in process and more information will be communicated as it becomes available. For now, anyone with an inactive entity should await further guidance before filing a BOI report.
Company information that has to be reported
The BOI report must provide the company’s full legal name, any trade or “doing business as” name, the complete current street address of the principal place of business, jurisdiction of formation, and employer identification number.
Beneficial Owner and Company Applicant information that has to be reported
The report must include the legal name, date of birth, complete current residential address, unique identifying number, and the issuing jurisdiction from either a current US Passport or State Driver’s License and an image of the document from which the identifying number was obtained, for each person who is required to report.
Definition of Beneficial Owner
A beneficial owner is an individual who, directly or indirectly, either exercises substantial control over a reporting company (business entity) or who owns or controls at least 25 percent of the ownership interests of a reporting company.
Definition of Company Applicant
Each reporting company that is required to report company applicants will have to identify and report at least one company applicant and at most two. All company applicants must be individuals. Companies or legal entities cannot be company applicants.
When should a company file its initial BOI report
If your company was created prior to January 1, 2024, it must file its initial BOI report by January 1, 2025.
If your company is created or registered to do business in the United States on or after January 1, 2024, then it must file its initial BOI report within 90 days of receiving actual or public notice that its creation or registration is effective.
What if there are any changes to the reported information?
If there is any change to the required information about your company or its beneficial owners in a BOI report that your company filed, your company must file an updated BOI report no later than 30 days after the date on which the change occurred. This includes any change to the information initially reported such as a change of address or an initial reporting error.
How are BOI reports filed?
The initial BOI report is filed online through FinCEN’s website at https://boiefiling.fincen.gov/fileboir
We will continue to share more about this legislation as we receive more information. In the meantime, please reach out to your ATBS Business Consultant with any questions.