Editor’s Note: Hours after this column was published, the Treasury Department suspended enforcement of ownership information reporting for millions of businesses.
The Corporate Transparency Act of 2020 requires businesses to report who really owns and controls them in an effort to crack down on financial crimes like money laundering and fraud.
This data, called beneficial ownership information, or BOI, lists anyone who owns or has significant control over a company, directly or indirectly. Originally, businesses had to file this info by Jan. 1, but court challenges put things on pause. Those legal roadblocks have been cleared, and the new deadline is March 21.
The Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury, is in charge of collecting BOI.
Those running a motorcoach company or a small business should know about some key exemptions.
For example, if your company has more than 20 full-time U.S.-based employees, a physical office in the U.S., and more than $5 million in gross receipts, you might not need to file. There are also exemptions for inactive entities that meet specific criteria.
For those who do need to file, FinCEN has made the process entirely online through its BOI e-filing portal.
But be warned: missing the deadline or filing incorrect information could mean hefty fines and even jail time.
Exemptions most applicable to motorcoach companies and other small businesses
- A large operating company is exempt if:
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- The entity employs more than 20 full-time employees (generally an average of at least 30 hours of service per week).
- More than 20 full-time employees of the entity are employed in the United States.
- The entity has an operating presence at a physical office within the United States. That means the entity regularly conducts its business at a location in the U.S. that it owns or leases and that is physically distinct from the place of business of any unaffiliated entity.
- The entity filed a U.S. federal income tax or information return for the previous year demonstrating more than $5 million in gross receipts or sales.
- The entity reported this amount as gross receipts or sales (net of returns and allowances) on its Form 1120, consolidated Form 1120, Form 1120-S, Form 1065, or other applicable IRS form
- When gross receipts or sales from sources outside the United States, as determined under federal income tax principles, are excluded from the entity’s amount of gross receipts or sales, the amount remains greater than $5 million.
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- An inactive entity is exempt if:
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- The entity was in existence on or before Jan. 1, 2020.
- It is not engaged in active business.
- It is not owned by a foreign person, whether directly or indirectly, wholly or partially.
- Ownership has not changed in the prior 12 months.
- The entity has had no transactions greater than $1,000 in the prior 12 months.
- It does not hold any assets.
Whose information is reportable?
- Any individual who directly or indirectly owns or controls at least 25% of the company’s ownership interests.
- Any individual who directly or indirectly exercises substantial control over the reporting company. Examples of substantial control include:
- Making important decisions about the reporting company’s business, finances, or structure.
- Being a senior officer such as president, CFO, etc.
- Company applicant
- An individual who directly files the document that creates or registers the reporting company.
- An individual primarily responsible for directing or controlling the filing.
- Information only needs to be provided for the company applicant for companies created or registered after 2023.
- Exceptions to beneficial owner requirement are:
- Minor child (reported by parent/legal guardian).
- Inheritor/creditor.
- Accountants and lawyers (unless they qualify as beneficial owners or company applicants).
- Employees (unless they qualify as beneficial owners or company applicants).
What information must be reported
Individuals must provide their full legal name; date of birth; street address; and a unique ID number with an image, such as a current U.S. passport or state driver’s license.
Each reporting company should provide the company’s legal name; DBA; street address; the state in which the company was formed; and its tax identification number.
When to file
The filing deadline is now March 21. FINCEN has not updated filing requirements for newly created entities. To keep up to date, visit FINCEN’s website at https://fincen.gov/boi.
How to file
Reporting companies must file their BOI reports electronically using the BOI e-filing
portal (https://boiefiling.fincen.gov/).
There are two ways to submit reports:
- Fill out a web-based version of the BOI report and submit it online (https://boiefiling.fincen.gov/fileboir).
• Upload a completed PDF version of the BOI report. The report cannot be faxed or mailed to FinCEN.
Penalties for not filing
There are civil and criminal penalties for noncompliance or providing false information.
This applies to reporting companies, beneficial owners, senior officers, and company
applicants.
The fine for willfully failing to complete an initial or updated report or for willfully
providing false or fraudulent information to a reporting company is $500 per day, up to
$10,000 and imprisonment for up to two years. The fine for knowingly disclosing or
using BOI without authorization is $500 per day, up to $250,000 and imprisonment for
up to five years.
Penalties may be avoided if a corrected report is filed no later than 90 days after the report containing inaccurate information is submitted.
For more detailed information and an FAQ, visit www.fincen.gov/boi.
This information is general in nature and is not intended as legal, accounting, or tax advice provided by BUSBooks LLC to the reader. This material may not apply to the reader’s specific circumstances and may require consideration of additional factors. BUSBooks LLC recommends that the reader contact a tax professional before taking any action based on this information. BUSBooks assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect this information.
UMA Member Tracy Fickett, CPA, operates BUSBooks, a specialty accounting firm dedicated to the motorcoach industry. If you have a question, you can reach Fickett at tracy@busbooks.co.
