FinCEN BOI Filing Requirements Are Much Broader Than People Realize & The Penalties Are Steep

*Update December 18, 2024: There is ongoing litigation around the FinCEN BOI filing requirement. If FinCEN prevails there are steep penalties for not filing. Consult with your attorney about the best course of action.

You may have heard some chatter at the last Chamber meeting; or perhaps you received a letter from your attorney or CPA about the Financial Crimes Enforcement Network Beneficial Ownership Information reporting requirements. If you’re like most people, you probably pushed that letter to the edge of your desk and figured you would deal with it later. In talking with our clients, we know that many people did not realize the letter applied to them.

Now is the time to take care of this filing requirement. 

Here are the key takeaways:

1. FinCEN BOI filing applies far more broadly than people recognize (common examples below)
2. You have to file online. 
3. The penalties for not filing are very high.
4. Filing is easy.

** This is article is educational in nature and not legal advice. Please consult with your attorney.**

Own, control, or manage an LLC, S-Corp, or other entity formed prior to 1/1/2024? FinCEN filings are due 12/31/24 & there is a $591/day penalty for late filings.

Generally speaking, FinCEN Beneficial Ownership Information reporting is required for most entities that were formed by filing paperwork with your State Corporation Commission or similar entity. If your entity was created or registered prior to January 1, 2024 you have until December 31st, 2024 to file. For those entities formed in 2024, you have just 90 days from receiving notice that your entity was approved to file your FinCEN BOI report.

There are an estimated 32 million filings that will need to be made before December 31st, 2024. While many filings will be relatively straightforward, some will be extremely complex and will require significant time to complete. Do not wait until the last minute. Penalties are already steep and are projected to increase in 2025.

What is FinCEN and the BOI filing?

If this is the first time you’ve ever heard of FinCEN, you’re not alone. FinCEN is tasked with countering fraud within the financial system, money laundering, and the financing of terrorism. FinCEN stands for the Financial Crimes Enforcement Network. As part of the Corporate Transparency Act the government wants to understand who are the actual humans behind the ownership of various entities. Which leads us to the beneficial ownership information filing.

Who has to file the FinCEN BOI

The penalties for incorrectly NOT filing are extremely high. Just because you haven’t heard from your attorney or CPA about this does not mean you are exempt from filing. 

It means you need to reach out to your attorney and ask about your particular situation! When in doubt, check it out.

It’s also worth reviewing your overall business financial structure at the same time — our business building team works with owners at every stage to make sure the financial side is as solid as the legal side.

Functionally, any entity that is created by filing paperwork with a Secretary of State (or tribal jurisdiction) or similar entity is a “reporting company.” This includes (but is not limited to) LLCs, Corporations, and certain types of trusts (including trusts that own LLCs) and estate planning vehicles may need to file. If your entity structure involves trusts or real estate, this is a good moment to review those alongside your broader wealth management plan.

There are limited exceptions to this rule (keep reading for the link).

A common misconception is that only active businesses need to file. That is not correct.

Here are some common examples of people who likely need to file this form:

You own a rental real estate property through an LLC

You have a small business that is formed as an LLC or corporation

You control an irrevocable trust that owns an interest in an LLC

You own a Family Limited Partnership that filed with a state entity

You own a Family Limited Partnership that owns LLCs

Family vacation homes that are owned by an LLC

You are a key employee for a reporting entity

Certain Homeowners Associations (see FAQ C.10)

If an entity was dissolved during 2024 you still have to file

If your LLC is dormant but it was not properly shut down and does not qualify for an exemption 

You need to ask your attorney to help you go through your formation documents and see who may be required to file. 

For example, with an irrevocable trust it may not be just the trustee who has to file. Trust protectors, trust loan directors, etc. may also have to file if the trust owns an LLC or has a reportable ownership interest in a reporting entity. Corporate officers, management members, and other control people in reporting entities may have to file. 

This is why it is so critical to consult with your lawyer to see who needs to file as the daily penalty is assessed on each person who hasn’t filed.

Exceptions to the BOI rule

There are limited exemptions from filing, for example, banks, credit unions, certain large entities, etc. FinCEN has put out a Small Entity Compliance Guide that you can review to see if you qualify for an exemption (page 4).

FinCEN Small Entity Compliance Guide

Certain inactive entities do not have to file but the qualifications are so limited that they may not apply very often. For example, you might have an old LLC which owned a rental real estate property that you sold a few years ago, but you left it open in case you do another deal. If you have any money or ownership interest in any investment or security, you’re not considered inactive according to question 6 below. 

Small Entity Compliance Guide “Inactive Exemption #23

Image dated October 29, 2024. Qualifications may have changed by the time you view this document. Please refer to the FinCEN Small Entity Compliance Guide for the most current information.

Again, please reach out to your attorney to see if you need to file and who else may need to file due to their affiliation with the entity.

What Your BOI Report Will Include

A reporting company will have to file this report for any “beneficial owner” and certain other individuals who are affiliated with the entity. Remember, you don’t have to actually own the entity, you may have to file if you have substantial control of the entity.  

Talk to your attorney to make sure you don’t accidentally omit a beneficial owner.

Reports will include the following information:

Information about the entity:

Legal name and any trade names 

Street address for the company’s principal place of business (a P.O. Box, lawyer’s address, or other advisor’s address will not be accepted)

State of formation

Tax Identification Number – if you don’t have a tax identification number you may have to obtain and provide a unique identifying number

An identifying document from an issuing jurisdiction and the image of that document

Information about the beneficial owner

Legal name, no initials

Date of birth

Home address (not a P.O. box or lawyer or other adviser’s address)

PDF (photocopy) of the individual’s U.S. passport or state driver’s license

Author’s note: This took me 15 minutes, including the time it took me to scan a copy of my driver’s license, and I read some of the extra directions because I err on the cautious side of these things.

Spark Clients: If we manage investments for you, we have a scanned copy of your driver’s license saved that you can use. Email us and we’ll move a copy to our shared folder.

Ready to file? Here’s the link: 

https://boiefiling.fincen.gov/

Consider Requesting a FinCEN Identifier Number

Any time any of this information changes, whether for your entity directly or for a reporting beneficial owner, FinCEN must be updated within 30 days or you will face stiff penalties. If you own an LLC or a trust that requires a BOI report for a number of people, you may wish to request that those individuals get a FinCEN Identifier Number so that if any of those people get a new driver’s license ID number, move, change their last name, etc. they are responsible for updating FinCEN. 

Without a FinCEN Identifier Number for your beneficial owners, the LLC or reporting entity is responsible for updating FinCEN with these name changes, address changes, etc. for any beneficial owner (owner or control person). 

In all practicality, this information could be hard to keep track of for your beneficial owners. Your beneficial owners may also prefer to keep their information private. By getting their own FinCEN Identifier Number your beneficial owners are able to have better control over their personal information.

How Hard is it to file the FinCEN BOI form?

It doesn’t take long if you own a simple LLC or S-corp. However, if you own a series of LLCs with multiple owners, or a trust with multiple individuals involved in making decisions for that trust, do not wait until the last minute to get this filed as it may take some time to gather all of the information or require outside legal counsel to assist you.

The penalty for late filing is $591 a day in 2024. Do not assume the attorney who helped you create the LLC is going to file this for you. Many attorneys and CPA firms are not filing these for clients. If you have a simple structure, you can probably do it yourself. If you have a more complex structure you need to reach out to your attorney now.

Here are the details from the FINCEN website:

https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf

If an entity was dissolved during 2024 you still have to file!

If your LLC is dormant and was not properly shut down, you need to file.

Penalties for not filing a FinCEN BOI report

In 2024 there is a $591/day civil penalty for not filing your FinCEN BOI report. This gets adjusted for inflation so in 2025 and beyond the penalties could be even higher. There are also criminal penalties of up to $10,000 and 2 years of jail time. Based on the small percentage of filing received so far this year, we anticipate there will be a rush of filings in December. Who knows how well the website will handle that crush of demand. Save yourself some headache and take care of this today.

This is general education only and not legal advice. We are not filing this form for any clients. You need to take action.