IRS BOI Report: Key Details Every Business Owner Should Know Before Dec 31
The Beneficial Owner Information (BOI) report is a critical filing requirement introduced by the IRS and enforced under the Corporate Transparency Act. Designed to promote transparency and curb illegal activities like money laundering and tax evasion, the BOI report requires businesses to disclose detailed information about their beneficial owners.
With the deadline set for December 31, 2024, all eligible businesses must act swiftly to comply and avoid severe penalties, including hefty fines and potential criminal charges. Whether you’re a small business owner or managing a larger entity, understanding the BOI filing process is essential to ensure compliance and protect your organization’s reputation.
What is BOI (Beneficial Owner Information)?
The Beneficial Owner Information (BOI) report is a regulatory requirement established by the Financial Crimes Enforcement Network (FinCEN) and enforced by the IRS. This filing aims to increase transparency and prevent illegal activities such as money laundering, tax evasion, and financial fraud by ensuring that companies disclose accurate information about individuals who own or control the business.
A beneficial owner is defined as anyone who directly or indirectly owns at least 25% of a company’s equity or exercises significant control over the entity.
Who Should File the BOI Report?
The BOI filing is mandatory for certain businesses registered in the United States, including:
- Corporations
- Limited Liability Companies (LLCs)
- Partnerships
- Other entities formed under state law
Exemptions may apply for certain large companies, publicly traded organizations, and regulated entities that already file similar information with federal or state authorities.
BOI Filing Requirements
To file the BOI report, entities must provide the following information:
-
Entity Information:
- Full legal name
- Business address
- State of incorporation or registration
- EIN (Employer Identification Number)
-
Beneficial Owner Information:
- Full legal name
- Date of birth
- Residential address
- Copy of an identifying document (e.g., driver’s license or passport)
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Filing Process: Reports are submitted electronically through the IRS or FinCEN-designated portal.
How Often Do You Need to File?
- Initial Filing: Businesses must submit their first BOI report by December 31, 2024.
- Updates: Businesses are required to update the BOI report within 30 days of any changes in beneficial ownership or company details (e.g., change in ownership percentage, address updates).
Penalties for Non-Compliance
Failing to comply with BOI filing requirements can result in significant penalties:
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Monetary Fines:
- Up to $500 per day for late filing.
- Maximum penalty can exceed $10,000 for extended non-compliance.
-
Criminal Charges:
- Willful failure to file or providing false information may result in criminal penalties, including fines and imprisonment.
Deadline for Filing: December 31, 2024
Businesses must ensure compliance by this date to avoid penalties.
Pros and Cons of Filing BOI Report
| Pros | Cons |
|---|---|
| Promotes transparency in business ownership, reducing illegal activities like money laundering. | Additional administrative burden, especially for small businesses. |
| Helps build trust with financial institutions and regulatory authorities. | Potential risk of sensitive information being accessed improperly if systems are not secure. |
| Simplifies compliance processes for entities already filing related reports. | Non-compliance can lead to hefty fines and possible criminal charges. |
Filing BOI reports can be complicated and time-sensitive. If you require assistance to ensure accurate and timely submission, contact Strits Tax LLC immediately. Our experienced tax professionals can guide you through the process, ensuring compliance and minimizing risk.
Don’t wait—reach out to Strits Tax ASAP and secure your business’s compliance before the December 31, 2024, deadline!