FAQs for BOI filing 

Why is Beneficial Ownership Important in Corporate Transparency Act reports?

Simply put, it’s about individuals owning 25% or more of a U.S. small business or having significant control over decisions. The Corporate Transparency Act mandates reporting personal details for those who own or control a company – these reports are called Beneficial Ownership Information reports by FinCEN. In the case of HOA’s any board member or person/entity owning 25% or more of the units in the HOA is responsible for filing their BOI with FinCEN.

Why is Sharing Beneficial Ownership Information with the U.S. Department of the Treasury Necessary?

In 2021, a bipartisan effort in Congress resulted in the Corporate Transparency Act’s passage. This law now requires companies to report beneficial ownership information, aligning with the U.S. government’s goal of impeding wrongdoers from hiding or benefiting from dishonest gains through shell companies or intricate ownership structures. The Corporate Transparency Act strives to establish a confidential database, aiding the Federal Government in uncovering all individuals associated with a reporting company.

Who Can Access Beneficial Ownership Information Under the Corporate Transparency Act?

The Corporate Transparency Act permits various authorities—Federal, State, local, and Tribal officials, and select foreign officials making requests through a U.S. Federal government agency—to access beneficial ownership information. It’s important to note that private citizens cannot access this database, and the information is not public.

Access is granted for activities authorized in national security, intelligence, and law enforcement. Financial institutions may also access such information in specific situations, provided the reporting company consents. Regulatory bodies overseeing these financial institutions will also have access during their supervision processes.

FinCEN is currently establishing rules to govern the access and handling of beneficial ownership information. All reported information will be securely stored in a non-public database, utilizing robust information security measures commonly employed in the Federal government for safeguarding sensitive yet unclassified information systems at the highest security levels.

FinCEN will work closely with authorized parties, ensuring they understand their roles and responsibilities, and guaranteeing that the information is used solely for authorized purposes and handled with the utmost priority on security and confidentiality.

What is the Deadline for Reporting My Company’s Beneficial Ownership Information to FinCEN?

• For Companies Formed or Registered Before January 1, 2024:
  • Deadline: January 1, 2025
  • Details: Submit the initial beneficial ownership information report by this date.
• For Companies Established or Registered Between January 1, 2024, and January 1, 2025:
  • Deadline: Within 90 calendar days of receiving notice of creation or registration.
    Start: The 90-day period begins upon official notification of creation or registration or after the first public notice by a secretary of state or similar office, whichever comes first.
• For Companies Created or Registered On or After January 1, 2025:
  • Deadline: Within 30 calendar days from the actual or public notice of the company’s effective creation or registration.

Additionally, companies must file updated reports within 30 days of any change to the company or a beneficial owner’s information after the initial report.

When Can I Submit Beneficial Ownership Information Reports to FinCEN?

• Start Date for Submission:
  • January 1, 2024
  • Details: FinCEN will begin accepting beneficial ownership information reports from this date onward.

How Can I Submit My Company’s Beneficial Ownership Information Report?

Purchase a subscription to HOAfiling.com and fill in your company information. You gain access to a dashboard to manage your companies and maintain ongoing compliance. The system will guide you through the reporting process. 

Is filing a Corporate Transparency Act report necessary for my company?

Unless your company falls under an exemption, known as a “reporting company,” you are required to file. Reporting companies encompass LLCs, corporations, or any entity formed by filing documents with a U.S. State.

Exemptions exist, with the Large Operating Company Exemption being the most common. To qualify, your business must have both 21 or more full-time employees and $5 million or more in sales on your last business tax return. Other exemptions, mostly for highly regulated companies, are less common.

To determine your filing status, use the TurboCTA Exemption tool, which assesses if your business qualifies for an exemption.

There are two categories of reporting companies:

• Domestic Reporting Companies:
  • Include corporations, limited liability companies, and other entities established by submitting documents to a secretary of state or a similar office within the United States. Almost every small U.S. business falls under this category.
• Foreign Reporting Companies:
  • Encompass entities like corporations and limited liability companies created under foreign laws, registered to conduct business in the United States by filing documents with a secretary of state or a similar office.

Are there exemptions under the Corporate Transparency Act?
There are 23 distinct entities exempted from the reporting obligations for beneficial ownership information. This includes publicly traded companies meeting specific requirements, numerous nonprofits, and certain large operating companies. Here’s a summary of the 23 exemptions:

1. Large Operating Company Exemption: Requires 21 or more full-time employees and $5 million or more in sales on the last business tax return.
2. Securities reporting issuer under section 15(d) of the Securities Exchange Act of 1934.
3. Company with governmental authority on behalf of a State or Tribe.
4. Registered Bank.
5. Registered Credit Union.
6. Registered Depository Institution Holding Company.
7. Registered Money Services Business.
8. SEC-registered broker or dealer in securities.
9. SEC-registered securities exchange or clearing agency.
10. Company registered under the Commodity Exchange Act.
11. SEC-registered investment company or investment adviser.
12. SEC-registered venture capital fund adviser.
13. Registered Insurance Company.
14. State-licensed insurance producer.
15. Commodity Exchange Act registered entity.
16. Registered Accounting Firm.
17. Public Utility Company.
18. Financial Market Utility Company designated by the Financial Stability Oversight Council.
19. Pooled Investment Vehicle operated by an SEC registered person.
20. Tax-Exempt Entity.
21. Entity exclusively existing to provide financial assistance or governance to a tax-exempt entity.
22. Entity 100% owned by an exempt entity.
23. Inactive entity created before 1/1/2020 with no assets, business activity, foreign owners, or ownership changes in the prior 12 months.

Before determining your company’s exemption status, carefully review the criteria associated with each exemption. Alternatively, utilize the Exemption Tool on TurboCTA for clarification.

What Qualifies Someone as a Beneficial Owner of a Reporting Company?

A beneficial owner is an individual who, either directly or indirectly:

• Exercises Substantial Control:
  • Substantial control means an individual may have zero ownership of the entity but possesses the authority to make critical decisions for the reporting company. This includes roles such as an board members, officer, manager, having the authority to appoint board members, sell or lease major assets, engage in significant contracts, or other forms of important decision-making.
• Owns or Controls a Minimum of 25% Ownership Interests:
  • Any individual with 25% or more of the ownership interests qualifies as a beneficial owner. In the case of HOAs any individual or company owning 25% of the units in the HOA would be considered a Beneficial Owner. This encompasses membership in an LLC, shares in a corporation, convertible notes and investment instruments, warrants, or any other form of ownership that either conveys ownership or can be converted into ownership. The threshold is individual, so, for instance, if someone owns 10% directly and an additional 30% through an LLC that invested in a reporting company, they would exceed the 25% threshold and need to be included as a beneficial owner.

What Does Substantial Control Entail?

To exercise substantial control, an individual can take four distinct paths. An individual is considered to have substantial control if they fall into any of the following categories:

• Senior Officer Status:
  • The individual holds a senior officer position, such as the company’s president, chief financial officer, general counsel, chief executive officer, chief operating officer, or any role performing a similar function.
• Authority in Appointing or Removing Officers or Directors:
  • The individual has the authority to appoint or remove specific officers or a majority of directors (or a similar body) within the reporting company.
• Key Decision-Making Role:
  • The individual plays a pivotal role in making significant decisions for the reporting company. This includes the ability to sell or lease assets, sign major contracts, or make high-level decisions for the reporting company.
• Other Forms of Substantial Control:
  • The individual exercises substantial control over the reporting company through any other means. It’s crucial to include ALL individuals with substantial control over the reporting entity.

How Do I Assess if an Individual Qualifies as a Beneficial Owner?

An individual is a beneficial owner when they play a crucial role in decisions related to any of the following:

• Business Operations:
  • Choices impacting the overall functioning and operations of the company.
• Financial Matters:
  • Decisions affecting the financial aspects and transactions of the company, including leasing, purchase, sale, or disposal of assets.
• Organizational Structure:
  • Determinations about the organizational framework and structure of the reporting company.

ANY individual guiding, determining, or significantly influencing these critical decisions is considered to exercise substantial control over the reporting company.

What Signifies Ownership Interest for FinCEN Reporting?

Ownership interest commonly denotes an agreement outlining ownership rights within the reporting company. Examples of ownership interests include diverse forms such as equity shares, stock, voting rights, or any mechanism used to signify ownership. When assessing the 25% threshold to determine if an individual is a beneficial owner, it is imperative to include ANY form of ownership.

Are Accountants or Lawyers Classified as Beneficial Owners under Corporate Transparency Act Rules?

Accountants and lawyers generally do not meet the criteria for being beneficial owners. However, this determination may depend on the nature of their work, especially if they are involved in setting up the entity, as discussed in a later section.

Accountants and lawyers providing standard accounting or legal services are typically not considered beneficial owners. Standard advisory or other third-party professional services to a reporting company are not deemed to confer “substantial control.” Additionally, a lawyer or accountant designated as an agent of the reporting company may qualify for the “nominee, intermediary, custodian, or agent” exception from the beneficial owner definition.

However, an individual holding the role of “general counsel” in a reporting company qualifies as a “senior officer” and, therefore, is considered a beneficial owner.

What Happens if Exempt Entities are Beneficial Owners of a Reporting Company?

When a beneficial owner exclusively holds or controls their ownership interests in a reporting company through various exempt entities, the reporting company has the option to provide FinCEN with the names of all these exempt entities instead of detailing the individual beneficial owner’s information.

It’s crucial to understand that this rule is specific and does not apply if an individual owns or controls ownership interests in a reporting company through a combination of exempt and non-exempt entities. In such instances, the reporting company must report the individual as a beneficial owner (unless an exception applies), while the exempt companies do not need to be listed.

Can a Service Provider Managing Day-to-Day Operations be a Beneficial Owner?

The unaffiliated company itself cannot qualify as a beneficial owner of the reporting company as a beneficial owner must be an individual.

Individuals exerting substantial control over the reporting company through the unaffiliated company must be reported as beneficial owners. However, individuals lacking influence over important decisions made by the reporting company and not exercising substantial control may not be deemed beneficial owners of the reporting company.

Is the “Tax Matters Partner” of a Reporting Company a Beneficial Owner?

The status depends on the circumstances. A reporting company’s “partnership representative,” or “tax matters partner,” is not automatically considered a beneficial owner of the reporting company. However, such an individual may qualify as a beneficial owner if they exercise substantial control over the reporting company or own or control at least 25 percent of the company’s ownership interests.

What Qualifies Someone as a Company Applicant for a Reporting Company?

The reporting obligation for company applicants applies exclusively to reporting companies established or registered on or after January 1, 2024. Companies formed prior to 2024 do not need to share their company application information.

A company obligated to report its company applicants will typically have up to two individuals who may qualify as company applicants:

• The individual directly submitting the document that establishes or registers the company.
• In cases involving multiple individuals in the filing process, the individual that is primarily responsible for directing or controlling the filing.

A maximum of two company applicants may be submitted. Importantly, company applicants are always individuals and never companies.

Reporting Company Applicants: Do I Have to Report Them?

Not all reporting companies are obligated to disclose their company applicants to FinCEN. The requirement to report company applicants applies only to a reporting company established or registered to do business in the United States on or after January 1, 2024. Companies formed before 2024 do NOT need to report their company applicants.

Is My Accountant or Lawyer Considered a Company Applicant?

The status of an accountant or lawyer as a company applicant depends on their role in filing the document that establishes or registers a reporting company. Frequently, company applicants may be affiliated with a business formation service or law firm.

An accountant or lawyer could be designated as a company applicant if they directly submit the document creating or registering the reporting company. In cases involving multiple individuals in the filing process, an accountant or lawyer might be a company applicant if they are primarily responsible for directing or controlling the filing.

For instance, an attorney at a law firm providing business formation services might oversee the preparation and filing of a reporting company’s incorporation documents. If a paralegal directly files the documents at the attorney’s direction, both the attorney and the paralegal are considered company applicants for the reporting company.

What Additional Information Must a Reporting Company Disclose?

Yes, the information to be disclosed depends on when the company was created or registered:

• If a reporting company is created or registered on or after January 1, 2024, it must report information about itself, its beneficial owners, and its company applicants.
• If a reporting company was created or registered before January 1, 2024, it only needs to provide information about itself and its beneficial owners. Company applicant information is not required.

What Information Must a Reporting Company Provide on a FinCEN BOI Report?

A reporting company must disclose:

• Legal name.
• Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names.
• Current street address of its principal place of business (if in the United States) or the current address from which the company conducts business in the United States (for foreign reporting companies).
• Jurisdiction of formation or registration.
• Taxpayer Identification Number (or a foreign-issued tax identification number if applicable).

Additionally, the reporting company must indicate whether it is filing an initial report, a correction, or an update of a prior report.

What Details Must a Reporting Company Include About Each Beneficial Owner?

For each individual classified as a beneficial owner, a reporting company is required to provide:

• The individual’s name.
• Date of birth.
• Primary residential street address.
• An identifying number from an acceptable identification document, such as a passport or U.S. driver’s license, along with the issuing state’s name or jurisdiction of the identification document.
• An image of the identification document used to obtain the identifying number mentioned in item 4.

What Details Must a Reporting Company Include?

For each individual designated as a company applicant, a reporting company must disclose:

• The individual’s name.
• Date of birth.
• Address (see below for details).
• An identifying number from an acceptable identification document, such as a passport or U.S. driver’s license, along with the issuing state’s name or jurisdiction of the identification document.
• An image of the identification document used to obtain the identifying number mentioned in item 4.

If the company applicant is engaged in corporate formation, such as working as an attorney or corporate formation agent, the reporting company must report the company applicant’s business address. Otherwise, the reporting company must report the residential address of the company applicant.

What Identification Documents Fulfill the Reporting Requirement?

The reporting requirement necessitates submitting only the following acceptable forms of identification:

• A non-expired U.S. driver’s license (including any driver’s licenses issued by a commonwealth, territory, or possession of the United States).
• A non-expired identification document issued by a U.S. state, local government, or Indian Tribe.
• A non-expired passport issued by the U.S. government.
• A non-expired passport issued by a foreign government (only when an individual does not possess one of the other three forms of identification listed above).

Is It Mandatory to Report Beneficial Ownership Information Annually?

No, there is no annual reporting requirement. Reporting companies must file an initial BOI report and submit updated or corrected BOI reports as necessary within 30 days of any change to the company information or the information of any beneficial owner. This includes address changes, board member changes, or individuals who own 25% or more of the units in an HOA changing. 

When Must I Submit to FinCEN?

• If your company existed before January 1, 2024, the deadline for filing the initial beneficial ownership information report is January 1, 2025.
• If your company was created or registered between January 1, 2024, and January 1, 2025, the initial report must be filed within 90 calendar days after receiving notice of the effective creation or registration. This deadline commences either upon the company’s actual notice or after a secretary of state or similar office publicly announces its creation or registration, whichever occurs earlier.
• If your company was created or registered on or after January 1, 2025, the initial beneficial ownership information report must be filed within 30 calendar days after receiving notice of the effective creation or registration.

Failure to meet these deadlines may result in FinCEN penalties.

Can a Parent Company File on Their Behalf?

No, a parent company cannot submit a unified BOI report for its group of companies. Each company meeting the definition of a reporting entity must independently file its own BOI report.

How Can I Do It Within 30 Days?

To obtain a TIN, specifically an Employer Identification Number (E.I.N.), within 30 days for timely BOI reporting, the Internal Revenue Service (I.R.S.) offers a free online application at irs.gov.

Foreign entities without an Individual Taxpayer Identification Number (ITIN) will need to request an EIN with a paper filing process that takes about 8 weeks. These companies should complete these filings shortly after formation to meet the 90-day requirement in 2024 for new entities.

Reporting companies not subject to U.S. corporate income tax may report a foreign tax identification number and the relevant jurisdiction’s name instead of an E.I.N. or TIN.

Is It Necessary to include Historical Beneficial Owners in Initial BOI Report?

No, an initial BOI report should only include beneficial owners as of the filing date. Historical beneficial owners need not be included. Reporting companies must promptly notify FinCEN of changes to beneficial owners through updated reports within 30 days of any change.

How Should I Handle Changes to Previously Reported Information?

In the event of any alterations to the required information about a reporting company or its beneficial owners in a filed beneficial ownership information report, an updated report must be filed within 30 days of the change to avoid penalties. No updated report is required for changes to previously reported information about a company applicant.

When is it Necessary to Revise My Beneficial Ownership Information Report?

Various circumstances may require submitting an updated beneficial ownership information report. Examples include:

• Changes in Reporting Company Details: Any modification to the information previously reported for the reporting company, such as adopting a new business name or changing the office address.
• Alterations in Beneficial Owners: Changes in beneficial owners, such as appointing a new C.E.O., updates in ownership affecting the 25 percent ownership interest threshold, or even a new address for a beneficial owner.
• Updates to Beneficial Owner Information: Any modifications to a beneficial owner’s name, address, or unique identifying number previously submitted to FinCEN. If a beneficial owner obtains a new driver’s license or another identification document reflecting a name, address, or identifying number change, the reporting company must file an updated beneficial ownership information report with FinCEN. This filing should include an image of the new identifying document.

Stay informed about these triggers to ensure timely updates and compliance with reporting requirements by subscribing to our updates in the footer of the website.

How Can I Correct Inaccuracies in a Report?

Discovering an inaccuracy in a beneficial ownership information report requires prompt correction. Follow these steps:

• Identify the Inaccuracy: Once aware or having reason to know of any inaccuracies in the report concerning your company, its beneficial owners, or its company applicants, initiate the correction process.
• Timely Correction: Your company must rectify the inaccuracies within 30 days from the date of awareness or having reason to know about the inaccuracy. This ensures compliance with reporting standards.

Maintain accuracy in your beneficial ownership information report by promptly addressing any discrepancies.

What Happens if I Fail to File My Corporate Transparency Act Report?

FinCEN ensures reporting companies comprehend and fulfill their obligations related to reporting, updating, and correcting beneficial ownership information. Acknowledging the newness of this requirement:

• Timely Corrections: Rectifying errors or omissions within 90 days of the original report deadline may prevent penalties.
• Potential Penalties: Failure to adhere to beneficial ownership reporting obligations might lead to civil and criminal penalties including $10,000 fines, penalties of $500 a day, and/or up to 2 years in jail.

Stay informed and comply with reporting standards to avoid legal consequences.

Do Tax-Exempt Companies Have to File FinCEN Reports?

Entities are eligible for the tax-exempt entity exemption if they meet any of these four criteria:

• 501(c) Organization: The entity is covered by section 501(c) of the Internal Revenue Code of 1986 (Code) and is tax-exempt under section 501(a) of the Code, disregarding section 508(a).
• Recent Tax-Exempt Loss: The entity, covered by section 501(c) of the Code, lost tax-exempt status within the last 180 days.
• Political Organization: The entity qualifies as a political organization under section 527(e)(1) of the Code and is tax-exempt under section 527(a) of the Code.
• Trust under Code 4947(a): The entity is a trust described in paragraph (1) or (2) of section 4947(a) of the Code.

Ensure your entity meets one of these criteria to claim the tax-exempt entity exemption.

Does My Inactive Company Need to File a FinCEN Report?

Entities meet the criteria for the inactive entity exemption if all six of these conditions are satisfied:

1. Existence before January 1, 2020: The entity was established on or before January 1, 2020. This is important because it means that inactive entities formed in 2020 and beyond are NOT exempt from reporting.
2. Inactive Business Operations: The entity is not actively engaged in business.
3. Non-Foreign Ownership: The entity is not owned, either wholly or partially, directly or indirectly, by a foreign person. A foreign person is not classified as a United States person, as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, encompassing U.S. citizens, residents, domestic partnerships and corporations, and other specified entities.
4. Stable Ownership: No changes in ownership occurred in the preceding twelve-month period.
5. Limited Financial Transactions: The entity has neither sent nor received funds exceeding $1,000, directly or through any affiliated financial account, in the past twelve months.
6. Asset Inactivity: The entity does not possess any assets, domestically or internationally, and holds no ownership interests in corporations, limited liability companies, or similar entities.

Your entity may only qualify for the inactive entity exemption by fulfilling all of these conditions.

How Do I Qualify for the Subsidiary Exemption for FinCEN Reporting?

An entity qualifies for the subsidiary exemption if the following applies: The entity’s ownership interests are 100% controlled or wholly owned, directly or indirectly, by any of these types of exempt entities:

• Securities reporting issuer
• Governmental authority
• Bank
• Credit union
• Depository institution holding company
• Broker or dealer in securities
• Securities exchange or clearing agency
• Other Exchange Act registered entity
• Investment company or investment adviser
• Venture capital fund adviser
• Insurance company
• State-licensed insurance producer
• Commodity Exchange Act registered entity
• Accounting firm
• Public utility
• Financial market utility
• Tax-exempt entity
• Large operating company

If a Company Initially Filed a Beneficial Ownership Information (BOI) Report but Qualifies for an Exemption, How Does it Communicate This to FinCEN?

A company that has always been exempt from BOI reporting doesn’t need to notify FinCEN. However, if a company initially filed a BOI report and subsequently qualifies for an exemption, it should submit an updated BOI report to indicate its new exempt status. This electronic filing involves the company identifying itself and marking a checkbox to signify its exemption.

How Can I Obtain a FinCEN Identifier?

A “FinCEN identifier” is a unique identifying number issued by FinCEN upon request. To acquire a FinCEN identifier, an individual provides their information directly to FinCEN, receiving the identifier in return. This FinCEN ID can then be used on reports in lieu of personal information. It’s important to note that each entity or individual is eligible for only one FinCEN identifier.

How is a FinCEN Identifier Obtained?

A “FinCEN identifier” is an individualized identification number issued by FinCEN upon request. This involves providing the individual’s information directly to FinCEN to receive a unique FinCEN identifier. Each entity or individual is eligible for only one FinCEN identifier.

How can an Individual Request a FinCEN Identifier?

Starting January 1, 2024, individuals can initiate a request for a FinCEN identifier through an electronic web form. The process entails providing details such as full legal name, date of birth, address, a unique identifying number from an acceptable identification document, and submitting an image of the said document. Upon submission, the individual promptly receives their unique FinCEN identifier.

How can a Reporting Company Request a FinCEN Identifier?

Reporting companies can request a FinCEN identifier by indicating their need on the Beneficial Ownership Information (BOI) report. Upon submission of the report, the company instantly obtains a unique FinCEN identifier. In cases where a reporting company requires a FinCEN identifier after the initial BOI report, it can submit an updated report specifically for this purpose, even if other information remains unchanged.

Is Obtaining a FinCEN Identifier Mandatory?

No, acquiring a FinCEN identifier is not obligatory for individuals or reporting companies.

How Should I Update Information Associated with My FinCEN Identifier?

For both individuals and reporting companies with a FinCEN identifier, prompt updates or corrections to the associated information are necessary.

• Individuals: Any changes to the submitted information must be reported within 30 days, including corrections if inaccuracies are identified.
• Reporting Companies: Should an update or correction be required, an updated or corrected Beneficial Ownership Information (BOI) report is necessary to update their FinCEN ID information.

Can I Deactivate an Unused FinCEN Identifier to Avoid Ongoing Updates?

FinCEN is actively exploring options to allow individuals to deactivate an unused FinCEN identifier. This initiative aims to relieve individuals from continuous updates of their underlying personal information. Additional guidance on this functionality will be provided as FinCEN finalizes this process.