BOI Reporting is Back
Most Businesses Have Until March 21
The fight against beneficial owner information in the Corporate Transparency Act suffered a setback on February 18.
The decision in Smith et all vs. US Department of the Treasury, et all in the Eastern District of Texas US District Court went in the treasury department’s favor and reinstated requirements for beneficial owner information (BOI). The move aligns with several recent rulings that have found BOI to be within Congress’s role under the commerce clause.
The Corporate Transparency Act requires certain U.S. and foreign entities to report beneficial ownership information to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. The form is online and free to file. “Certain US and foreign entities” extends to a vast majority of businesses in the country from partnerships to LLCs. This has been a major discussion in the commercial real estate sectors with a history of transferring buildings into an LLC for liability protection. So many investors have numerous “shell” LLCs that are simply a holding for that building and allow the ownership group to become a legal entity. But now a form needs to be filed for EVERY one of the LLCs.
Financial Enforcement Crimes Network (FinCEN) has established that most businesses have thirty days, which is March 21, to report BOI or begin facing fines. Civil fines are $591 per day with no cap on the amount they can charge. If you are believed to have not filed “on purpose” then criminal charges are possible with sentences of up to two years in jail and $10,000 in fines.
“As anticipated, the federal court in Texas has allowed the enforcement of this landmark law, in alignment with the Supreme Court’s recent decision,” said Scott Greytak, director of advocacy for Transparency International U.S., in a recent statement. “Treasury should move swiftly to make sure that this vital national security law is fully enforced, and that America’s law enforcement officials are armed with the tools necessary to cut off the flow of dirty money from transnational criminals into the U.S.”
Many businesses have opposed the act as invasive and burdensome. The form will become a yearly requirement for virtually all businesses. There are moves to make the process more streamlined and to reduce the reporting for the low-risk entities.
The online filing form is available at boiefiling.fincin.gov.
