Anaya Nolan
The Financial Crimes Enforcement Network (FinCEN) requires reporting companies to submit Beneficial Ownership Information (BOI) reports to prevent tax evasion or fraud, money laundering, and other unethical and illegal financial practices. BOI refers to the personal information of each beneficial owner, including their name, date of birth, address, and an identifying number from an acceptable identification document. While the BOI report is not directly related to taxes, it is a topic of interest for small business owners during tax season.
| Characteristics | Values |
|---|---|
| Purpose | To fight against tax evasion or fraud, money laundering, and other unethical and illegal financial practices |
| Target | Small businesses and shell companies |
| Entities Impacted | 30 million+ businesses |
| Report Submission | To be submitted directly to FinCEN through its online Beneficial Ownership Secure System (BOSS) |
| Report Components | Name, date of birth, address, and an identifying number from an acceptable identification document, such as a passport or U.S. driver's license |
| Applicable Law | Corporate Transparency Act (CTA) |
| Reporting Companies | Corporations, limited liability companies, and other similar entities |
| Exempt Entities | "Domestic reporting companies" and "foreign reporting companies" with U.S. beneficial owners |
| Non-Exempt Entities | Foreign entities that register to do business in the U.S. |
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What You'll Learn
BOI reporting requirements for US companies
BOI, or beneficial ownership information, is a type of reporting requirement that applies to certain companies and individuals under the Corporate Transparency Act (CTA). The CTA, which came into effect on January 1, 2024, mandates that specific types of entities, including corporations and limited liability companies, submit BOI reports to disclose their beneficial owners. However, it's important to note that the CTA also authorizes the Secretary of the Treasury to exempt certain entities or classes of entities from these requirements if it is deemed not to be in the public interest or particularly useful for national security, intelligence, and law enforcement efforts.
In March 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that significantly altered the BOI reporting obligations for US companies and individuals. This rule removed the requirement for US companies and US persons to report BOI to FinCEN. The definition of a "reporting company" was revised to refer only to entities formed under foreign laws that have registered to do business in any US state or tribal jurisdiction. As a result, all entities created in the United States, including those previously considered "domestic reporting companies," are now exempt from reporting BOI.
However, foreign entities that meet the updated definition of a "reporting company" and do not qualify for an exemption are still subject to BOI reporting requirements. These foreign entities must submit their BOI reports to FinCEN by the specified deadlines. It's worth noting that these entities are not required to report any US persons as beneficial owners, and US persons are not obligated to report BOI regarding these entities.
While the removal of BOI reporting requirements for US companies and individuals may provide regulatory relief, it has also sparked concerns among members of Congress. Some worry that the original purpose of the CTA, which is to mitigate anti-money laundering risks, may be compromised. FinCEN intends to solicit feedback on the interim final rule and plans to issue a final rule during 2025. There is a possibility that BOI reporting requirements may be reinstated for US companies with foreign owners that pose anti-money laundering risks.
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Foreign reporting companies
The Beneficial Ownership Information (BOI) report is a new requirement that came into effect on January 1, 2024, with an estimated 32.6 million entities needing to comply. It is not related to taxes, but it is aimed at fighting tax evasion or fraud, money laundering, and other unethical and illegal financial practices.
The BOI report requires companies to disclose the personal information of each beneficial owner. A beneficial owner is an owner of companies, investments, property, or other assets whose name does not appear on the official title of that asset. This is usually for the owner's convenience, safety, or privacy.
On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) announced that it was issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) under the Corporate Transparency Act. This rule revises the definition of a "reporting company" to mean only those entities formed under foreign law and registered to do business in any U.S. State or Tribal jurisdiction (formerly known as "foreign reporting companies").
Foreign entities that meet the new definition of a "reporting company" and do not qualify for an exemption must report their BOI to FinCEN under new deadlines. These entities will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not need to report BOI regarding these entities. The deadlines are as follows:
- Reporting companies registered before March 26, 2025, must file BOI reports by April 25, 2025.
- Reporting companies registered on or after March 26, 2025, have 30 calendar days to file an initial BOI report after receiving notice of effective registration.
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Domestic reporting companies
The Beneficial Ownership Information (BOI) report is a new requirement that is likely to be a point of confusion for many small business owners. It is not related to taxes, but it is a hot topic for small business owners across the country. The BOI report is an effort to fight tax evasion or fraud, money laundering, and other unethical and illegal financial practices. Individuals who engage in these practices often use small businesses or shell companies to do so, keeping their names off the books and making it easier to avoid being caught.
The BOI report makes it harder to hide, as it requires these companies to report the personal information of each beneficial owner. FinCEN lists two types of "reporting companies" (companies required to file a BOI Report). 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.
On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) announced that it was issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act. FinCEN published this interim final rule on March 26, 2025. In the interim final rule, FinCEN revised the regulatory definition of a "reporting company" to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as "foreign reporting companies").
FinCEN also exempts entities previously known as "domestic reporting companies" from BOI reporting requirements. Thus, through this interim final rule, all entities created in the United States—including those previously known as "domestic reporting companies"—and their beneficial owners are exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a "reporting company" and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines.
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BOI reporting exemptions
BOI, or Beneficial Ownership Information, reporting is a requirement for companies to disclose the personal information of each beneficial owner. This is done to combat tax evasion or fraud, money laundering, and other unethical and illegal financial practices. The Corporate Transparency Act (CTA) came into effect on January 1, 2024, and requires an estimated 32.6 million entities to comply with the new BOI report.
There are several exemptions to the BOI reporting requirements, including:
- U.S. citizens and permanent residents are exempt from being listed as beneficial owners.
- Anyone acting as a nominee, intermediary, custodian, or agent on behalf of another individual, such as lawyers, accountants, or proxies.
- Anyone acting solely as an employee who is not a senior officer.
- Anyone who only holds interest through an inheritance.
- International insurance companies that provide company applicant and beneficial ownership information to a state or federal agency.
- International businesses that act as public utility companies and are regulated and registered with a federal or state agency.
- Most international banks and credit unions, as long as they meet certain conditions.
- Investment advisers registered with the SEC.
- Entities that were in existence before January 1, 2020, are not engaged in active business, are not owned by a foreign person, have not had any changes in ownership, have not sent or received funds exceeding $1,000, and do not hold any assets.
- Domestic entities, including all entities created in the United States and their beneficial owners.
- U.S. companies and U.S. persons are exempt from reporting beneficial ownership information to FinCEN under the CTA.
- HOAs recognised by the IRS as section 501(c)(4) social welfare organisations.
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BOI and tax filing
BOI, or Beneficial Ownership Information, reporting is a federal law requirement that came into effect on January 1, 2024, impacting an estimated 30 million businesses. While the BOI report is not directly related to taxes, it is a topic that small business owners should be aware of during tax season.
The BOI report aims to combat tax evasion, fraud, money laundering, and other unethical financial practices. It requires "reporting companies" to disclose the personal information of each beneficial owner, making it more challenging for individuals to hide behind small businesses or shell companies to engage in illegal activities.
According to the Corporate Transparency Act (CTA), a "reporting company" refers to a corporation, limited liability company, or similar entity registered to do business in the U.S. by filing with a secretary of state or comparable office. This includes both domestic and foreign entities. However, there are exemptions to the reporting requirements, such as for tax-exempt entities or certain entities formed under Tribal law.
Companies must file their BOI reports with FinCEN, the Financial Crimes Enforcement Network, an agency under the Department of the Treasury. The information required includes the beneficial owner's name, date of birth, address, and identification number from a passport or driver's license. Additionally, the reporting company's legal name, trade names, and address of its principal place of business must be provided. These reports are stored in a secure, non-public database, with access limited to authorized government and financial institution officials.
It is important to note that the BOI filing requirements for U.S. companies and persons were removed in an interim final rule issued by FinCEN in March 2025. This rule revised the definition of a "reporting company" to include only foreign entities registered to do business in the U.S. Therefore, U.S. companies and individuals are no longer required to report BOI to FinCEN under the CTA. However, foreign entities registering to do business in the U.S. have 30 days to file their initial BOI report after receiving notice of their effective registration.
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Frequently asked questions
BOI stands for Beneficial Ownership Information. It is a new federal law requirement that came into effect on January 1, 2024, impacting an estimated 30 million businesses. It requires reporting companies to disclose the personal information of each beneficial owner. This includes the owner's name, date of birth, address, and an identifying number from a passport or driver's license.
The BOI law applies to both domestic and foreign entities, including corporations, limited liability companies, and other similar entities created or registered to do business in the U.S. by filing with a secretary of state or similar office.
The purpose of the BOI law is to combat tax evasion, fraud, money laundering, and other unethical financial practices. It aims to increase transparency and accountability by requiring the disclosure of beneficial owners, who are often hidden behind shell companies or small businesses to avoid detection.
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