SMALL BUSINESS OWNER?
A NEW FILING REQUIREMENT MIGHT APPLY TO YOUR COMPANY.

November 25, 2024

DEAR MEMBERS,

A bipartisan law, passed to protect U.S. economic and national security, requires many small businesses to report beneficial ownership information (BOI) to the U.S. government about the real people who control them.

Many companies in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN).

WHEN MUST BENEFICIAL OWNER INFORMATION BE REPORTED?

According to FinCEN, any company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial BOI report. A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.

If there have been any changes to your beneficial ownership information, please notify us within 30 days and provide the necessary documentation to update our records. Failure to do so may result in service interruptions.

WHAT IS THE FINANCIAL CRIMES ENFORCEMENT NETWORK (FINCEN)

FinCEN is a bureau of the U.S. Department of the Treasury. The Director of FinCEN is appointed by the Secretary of the Treasury and reports to the Treasury Under Secretary for Terrorism and Financial Intelligence. Click here for more information.

There are two types of reporting companies:

- Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
- Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

There are 23 types of entities that are exempt from the reporting requirements. Carefully review the qualifying criteria before concluding that your company is exempt.

(FinCEN’s Small Entity Compliance Guide for beneficial ownership information reporting includes the following flowchart to help identify if a company is a reporting company.)

Because beneficial owners must be individuals (i.e., natural persons), trusts, corporations, or other legal entities are not considered to be beneficial owners. However, in specific circumstances, information about an entity may be reported in lieu of information about a beneficial owner.

WHO HAS ACCESS TO THE BENEFICIAL OWNER INFORMATION?

FinCEN is developing the rules that will govern access to and handling of beneficial ownership information.
Currently these entities will have access:

– Federal Officials
– State & Local Officials
– Tribal Officials
– Financial Institutions

Certain foreign officials who submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement.

HOW WILL BENEFICIAL OWNER INFORMATION BE STORED?

Non-public database using rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level.

FinCEN will work closely with those authorized to access beneficial ownership information to ensure that they understand their roles and responsibilities to ensure that the reported information is used only for authorized purposes and handled in a way that protects its security and confidentiality.

HOW WILL I REPORT MY COMPANY’S BENEFICIAL OWNERSHIP INFORMATION?

If you are required to report your company’s beneficial ownership information to FinCEN, you will do so electronically through a secure filing system available via FinCEN’s BOI E-Filing website (https://boiefiling.fincen.gov).

WILL THERE BE A FEE FOR SUBMITTING A BENEFICIAL OWNERSHIP INFORMATION TO FinCEN?

No. There is no fee for submitting your beneficial ownership information report to FinCEN.

IS THERE A PENALTY FOR FAILING TO SUBMIT YOUR BENEFICIAL OWNERSHIP INFORAMTION?

A person who willfully violates the Beneficial Ownership Information reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues. That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000.

FinCEN has prepared an extensive list of Frequently Asked Questions (FAQs) in response to inquiries received relating to the Beneficial Ownership Information Reporting Rule and Beneficial Ownership Information Access and Safeguards Rule. Visit their official site to learn more.

If you have any additional questions regarding your beneficial owner status, please refer to FinCEN’s Website or contact your tax provider for additional information. Please feel free to contact a Member Service Representative at 605-857-3489 for additional assistance.

Additional Resources:

This advertisement is explanatory only and does not supplement or modify any obligations imposed by statute or regulation. For additional information, please see www.fincen.gov/boi to learn more. Copyright © 2024 Financial Crimes Enforcement Network (FinCEN), U.S. Department of the Treasury. Version 1.0 — Published July 2024