You’ve probably read or heard about the new Business Owner Information (BOI) reporting requirement. As with many new regulations, there can be confusion and questions about the guidelines, deadlines and costs. But the biggest question is you have is probably, “Am I required to submit a BOI Report?”
New Rules, New Crimes
Before answering that question, we wanted to point out that the Financial Crimes Enforcement Network (FinCEN) has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act.
These fraudulent emails and letters may be titled “Important Compliance Notice” and they tell you to click on a URL or scan a QR code. DO NOT CLICK OR SCAN anything in these messages. FinCEN does NOT send unsolicited requests.
You can, however, request to receive legitimate FinCEN emails by signing up on their website. There is no charge to sign up and you can change your email subscription at any time. FinCEN will continue to provide guidance, information and updates related to BOI reporting requirements on its webpage. FinCEN is also engaging with governmental offices at the federal and state levels, small business and trade associations, and interest groups.
Transparency and Integrity
In 2021, Congress enacted the bipartisan Corporate Transparency Act to curb illicit finance and it went into effect January 1, 2024. This law requires many companies doing business in the United States to report information about who ultimately owns or controls them. There is no cost to file this report.
The Beneficial Ownership Information (BOI) Report is the mechanism by which entities submit this information to FinCEN. The company must also submit certain information about itself, such as its name(s) and address, as well as basic identifying, verifiable information about each beneficial owner:
Name
Date of birth
Address
Identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.
As you can see from the list above, much of the information is similar to the requirements for opening a commercial bank account. The FinCEN website provides three submission options:
- File a PDF BOIR (prepare offline using Adobe Reader at your own pace, then upload).
- File an online BOIR (and then download the transcript upon submission).
- Use a system-to-system BOIR transmission via secure API for those, including third-party service providers, who are interested in automating the BOIR filing process.
Insurance Agency Implications
While a large number of entities will be required to submit a BOIR, many insurance agents and agencies will be exempt from this requirement. The Small Entity Compliance Guide includes a list of 23 different exemptions, including Exemption #13 for state-licensed insurance producers if they meet both of the following criteria:
- The entity is an insurance producer that is authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State.
- The entity has an operating presence at a physical office within the United States, meaning that the entity regularly conducts its business at a physical location in the United States that the entity owns or leases and that is physically distinct from the place of business of any other affiliated entity.
Even if you’re not required to submit a BOIR, you can consider submitting your BOI details for transparency.
Important Dates and Additional Details
Even if you are exempt from filing, it’s good to be aware of the new BOI reporting requirements and deadlines since some of your clients may need to submit a BOIR. Here are the key dates to know:
- FinCEN began accepting reports on January 1, 2024.
- If your company was created or registered prior to January 1, 2024, you have until January 1, 2025 to report BOI.
- If your company is created or registered in 2024, you must report BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
- If your company is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.
Finally, if you want to really dig into BOI, the FinCEN website contains an robust list of FAQs or you can watch this video from U.S. Department of the Treasury’s Under Secretary for Terrorism and Financial Intelligence, Brian Nelson.
