(This rule impacts your 2024 business filing. It is not part of your tax return.)
Why is this happening?
As of January 1, 2024, newly formed entities will have to report beneficial ownership to FinCEN (Financial Crimes Enforcement Network). FinCEN is a bureau of the U.S. Department of the Treasury.
“… the rule will enhance the ability of FinCEN and other agencies to protect U.S. national security and the U.S. financial system from illicit use and provide essential information to national security, intelligence, and law enforcement agencies; state, local, and Tribal officials; and financial institutions to help prevent drug traffickers, fraudsters, corrupt actors such as oligarchs, and proliferators from laundering or hiding money and other assets in the United States.”
Why doesn’t the IRS need this form?
This filing is not part of your tax return because FinCEN is under the U.S. Department of the Treasury, not the IRS.
What is a beneficial owner?
A Beneficial Owner is an individual who either directly or indirectly (1) exercises substantial control over the reporting company or (2) owns or controls at least 25% of the reporting company’s ownership interests.
Timing notes: Reporting companies created or registered before January 1, 2024, will have one year (until January 1, 2025) to file their preliminary reports, while reporting companies created or registered after January 1, 2024, will have 30 days after receiving notice of their creation or registration to file their initial reports. Reporting is done electronically through the FinCEN’s website.
BRAND NEW GUIDE: The government’s 50-page “BOI (Beneficial Ownership information) Small Entity Compliance Guide” was published on September 18, 2023, and can be found here.
This helpful guide:
- Describes the BOI reporting rules,
- Answers key questions, and
- Provides interactive checklists, infographics, and other tools to assist businesses of all sizes with the BOI reporting rule.
Who is responsible for the filing must be clear, as there will be penalties for not complying. If you use an attorney to set up the business entity, they might offer to complete or assist with these filings. We recommend you contact your attorney to assist you with this matter.
