5 Fast Facts on Beneficial Ownership Information Reporting

Many businesses must soon report new beneficial ownership information (BOI) to the U.S. government. We’re sharing important updates and five fast facts to help you clarify your responsibilities.

We recommend you reach out to your attorney to discuss how to proceed with BOI reporting. CLA does not advise on or assist with BOI reporting preparation.

Background on beneficial ownership reporting rule

In 2021, Congress enacted the Corporate Transparency Tax Act (CTA), which initially established uniform BOI reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States.

The CTA is designed to help the U.S. government collect information necessary to prevent bad actors from using the U.S. financial system to facilitate money laundering, tax evasion, human and drug trafficking, and other illicit activities.

The CTA authorizes the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, to collect and disclose BOI information to authorized government authorities and financial institutions.

BOI scope over time

Since CTA’s enactment, FinCEN has issued numerous updates and implementing regulations — the basics of which are discussed briefly below.

FinCEN issued an interim final rule on March 26, 2025, which limits BOI reporting to foreign entities registered to do business in the United States. Domestic entities are no longer required to file BOI reports with FinCEN under this interim final rule. For more information, please visit the Interim Final Rule: Questions and Answers page published by FinCEN.

5 fast BOI reporting FAQs

1. What companies will be required to report BOI to FinCEN?

On March 26, 2025, FinCEN issued an interim final rule limiting BOI reporting. Only those entities formed under the law of a foreign country that have registered to do business in any U.S. state or Tribal jurisdiction must file a document with a secretary of state or similar office. FinCEN also formally exempted domestic entities from BOI reporting requirements.

2. Are there exemptions from BOI reporting?

Yes. All domestic entities created in the United States, and their beneficial owners, are exempt from the requirement to file initial BOI reports, or to update or correct previously filed BOI reports.

In addition, FinCEN notes 23 BOI reporting exemptions. Perhaps the most common exception to BOI reporting is the large operating company exemption. Generally, a foreign entity meets this exemption if it has at least 20 full-time employees, more than $5 million in gross receipts or sales, and an operating presence at a physical office within the United States.

Other exemptions apply to Section 501(c)(3) tax-exempt entities and certain types of regulated financial companies.

3. When does BOI reporting start?

Foreign entities that have registered to do business in any U.S. state or Tribal jurisdiction and do not qualify for an exemption from the reporting requirements (a “reporting company”) must file BOI reports with FinCEN under new deadlines:

• Reporting companies registered to do business in the United States before March 26, 2025, must file BOI reports by April 25, 2025.
• Reporting companies registered to do business in the United States on or after March 26, 2025, have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.

4. What information does a reporting company disclose to FinCEN?

A reporting company must report:

• Its legal name
• Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names
• The current street address of its principal place of business if that address is in the United States, or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States
• The foreign jurisdiction of formation of the reporting company
• The state or Tribal jurisdiction where the reporting company first registers
• The IRS taxpayer identification number (TIN), including an employer identification number (EIN), of the reporting company; or where a reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction

In addition, for each individual who is a beneficial owner or company applicant, the reporting company must report:

• Individual’s name
• Date of birth
• Address
• Unique identifying number from an acceptable identification document (e.g., driver’s license, passport, etc.)
• Name of the state or jurisdiction that issued the identification document

What is a beneficial owner?

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

1. Exercises substantial control over the reporting company (e.g., a senior officer or key decision-maker), or
2. Owns or controls at least 25% of the reporting company’s ownership interests.

A corporate entity owner is “looked through” to its ultimate owners for purposes of determining the 25% ownership test.

Under the interim final rule, a reporting company does not need to report the BOI of any U.S. persons, and U.S. persons are exempt from having to provide BOI with respect to any reporting company for which they are a beneficial owner.

Although not required, many filers are encouraged to obtain FinCEN identifiers to help facilitate filing this information.

There is no fee to file BOI reports with FinCEN.

5. Are there penalties for failing to file BOI reports with FinCEN?

Yes, be aware of BOI filing penalties. A person who willfully fails to comply with BOI reporting may be subject to civil penalties of $500 per day (adjusted for inflation it is now $591 per day) and criminal penalties including a $10,000 fine and/or up to two years of imprisonment.

CLA will not advise on or assist with BOI reporting preparation. We recommend you reach out to your attorney for assistance in complying with these filings.

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