Earlier this summer, I started receiving questions from tax clients that are business owners asking, "What is all of this information about BOI (beneficial owner information) reporting and do I have to do it?" So I began researching to figure out what it is to provide answers. As a small business and sole proprietor, this new regulation didn't apply to me so I hadn't heard much about it. Several hours and articles later, here is what I learned (in a nutshell) below....
So back in 2021, the United States Congress enacted the bipartisan Corporate Transparency Act to curb illicit finance. This law created and now requires many companies doing business in the United States to report information about who ultimately owns or controls them as a way to make it harder for bad actors to hide or benefit from their ill-gotten gains (illicit activity) through shell companies or other creative ownership structures. So, Financial Crimes Enforcement Network (FinCEN) got to work on implementing a reporting requirement in January 2024. Ok, ok, I know you're like wait, who the heck is FinCEN?
Let me back up, lol. FinCEN is a bureau of the US Department of the Treasury (just like the IRS) that operates as a financial intelligence unit. The mission of FinCEN is to safeguard the financial system from illicit activity, counter money laundering and the financing of terrorism, and promote national security through collecting, analyzing, and sharing of financial intelligence. So ultimate the goal of beneficial owner information report is to help protect our financial system from financial crimes. They just want to know, who owns this company and who is responsible for it. #dassit
The original deadline was January 1, 2025 for all required companies to file this information but there have been a series of lawsuits and court orders that have temporarily halted the requirement, for now. But we will all have to keep a close eye on it, because this could change. Now, if you don't have time (or patience) for all of the back and forth, you can still voluntarily submit beneficial ownership information reports to get it out of the way per the FinCEN website.
Here is just a snippet of the back and forth that has happened so far.
December 3, 2024 - District court case was filed (in Texas) and a nationwide injunction was put in place for the reporting requirement.
December 5, 2024 - the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal
December 23, 2024 - a panel of the U.S. Court of Appeals granted a stay of the district court’s preliminary injunction FinCEN immediately issued an alert recognizing that reporting companies may have needed additional time to comply with beneficial ownership reporting requirements, and extended the deadline.
December 26, 2024, different panel of the U.S. Court of Appeals issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. SO, as of December 26, 2024, the injunction issued by the district court in Texas is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.
Again, at this point, you can hold off or go ahead and submit the form to get it out of the way. What you DONT want to do is allow the reporting requirement to be reinstated and you MISS the deadline. Because then, there could be hefty penalties to pay. Businesses and owners that do not comply would potentially face civil penalties of up to $591 a day, adjusted for inflation, according to FinCEN. They could also face up to $10,000 in criminal fines and up to two years in prison. So if you created an LLC before 2024, you should be prepared to submit your BOIR soon or be ready to do so.
Filing is easy and free at this website https://boiefiling.fincen.gov if you're ready to move forward and it should only take a few minutes. I hope this has been helpful. Shoot me a message or email me (monique@sparktaxprep.com) if you have questions.
Until next time,
Monique
.png)
Komentar