Beneficial Ownership Filing (US companies)

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jeff

jeff

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I know many of you have LLCs, S-Corps, etc. Hopefully you are aware of the new requirements in the US for submitting "Beneficial Ownership Information." There are some exemptions, but most companies are subject to the filing requirement. You can read about it here: https://www.fincen.gov/boi-faqs Generally, if you filed something with your Secretary of State to form your company, you are subject to the requirement.

Here's a description of the BOI requirement: The Corporate Transparency Act (CTA) was passed as part of the Anti-Money Laundering Act in 2021 by Congress to help law enforcement flag and respond to financial crimes. This bill mandates many businesses to file a beneficial ownership information report to the Financial Crimes Enforcement Network (FinCEN). The stated purpose of this new requirement is to prevent malicious individuals from hiding their identities through the use of shell companies.

Just a heads up in case you are unaware of this. Stiff penalties for failure to file.
 
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wolf creek knives said:
Saw it, hate it and I've got an appointment with my CPA to ask a lot of questions about it. I truly think this is govt overreach and a bunch of BS. Thanks for sharing Jeff!
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This is a very true statement. It targets small business only. I think it's a way the fed is trying to completely crush small business in this country.
 
I love when these requirements come out, but no notice on the requirement is sent out. If I had not read this post I would have never known anything about it.
 
Does it include a sole proprietorship? My father and I looked into some type of incorporation. Our attorney/CPA said if we did, we would be liable to pay personal income tax plus corporate tax. Just curious.
 
I'm a CPA. Everything you need to know is available on the websites identified by Jeff. It is big "Big Government" getting more involved in your business. Like most requirements they appear designed to protect you. Remember, the best way to raise taxes without changing the code (which are acts of Congress and the Senate - not the IRS: they don't have brains quite frankly - they are just the enforcement arm) to increase enforcement. Audited plenty of mob run "businesses" in NYC as well as unions (not knocking unions). This is to catch/squeeze the little guys - the honest middle class Americans - those without the wherewithal to defend themselves and will simply hand themsleves over b/c they are afraid to lose their livelyhoods. My cousin is a retired enforcement IRS agent - the armed agents that confiscate property when you are not home. This stuff would drive him nuts. I am not suggesting you don't consult your CPA - we love a good $400 for 15 minutes work (which I never had the heart to charge). Read through the documentation to assuage our concerns - consult whomever you want but inform yourself first/simultaneously. Lasty the IRS/Enforcement agencies do NOT accept wha your CPA told you as a defense. The IRS hates CPAs.
 
To maintain my license, I subscribe to a CPE (continuing professional education fot CPAs) service. I will ask the service if they offer any training materials for this. If they do, I will download and share with all. I just browsed their catalogu and didn't see anying with the specific wording. It may be buried in another course. If they inform me that that have something, I will share.
 
Just like when they forced PayPal and others to send tax documents to you and the IRS after receiving $600 or more. It is aimed at the little guy!
 
I am also a CPA with my own firm. Our insurance company (and many others) feel that the BOIR is a legal filing rather than a tax filing. So they won't cover us if we file them for clients. We are informing our clients of the need to file. It can be done on the fincen website. Mine took about 15 minutes. It asks for the company name and information (address, etc) and information for every owner of the company. One thing it asks of the owners is a copy of a picture ID - most likely your driver's license. The one-time original filing is due by 12/31. My understanding is that, other than the initial filing, it is required to be updated when any information changes. So, in theory, when you get a new driver's license, that is an information change, and you have 30 days to update. Or if you move or the company address changes, you have 30 days to update. The bigger catch is that the penalties are currently at $590 per day. The agency is saying that they won't charge those to people trying to comply. But, those are what the penalties are in the law. As well, part of the law has been found unconstitutional by a federal court in Alabama (At least I think it was Alabama). That decision has been appealed and stayed (if I have the terminology right). But it means, that for now, your initial filing is still due by 12/31. There is a push to get the initial due date delayed, but with it being an election year, not much is getting done in that direction.
 
Still see nothing for a sole proprietorship. Edit: Never filed anything with the state.
So if it is only a legal filing, why is it needed? If I was a criminal, I would just report it as income...as a consultant with no business name.
"I'm from the government and I'm here to help you."
 
Woodchipper said:
Still see nothing for a sole proprietorship. Edit: Never filed anything with the state.
So if it is only a legal filing, why is it needed? If I was a criminal, I would just report it as income...as a consultant with no business name.
"I'm from the government and I'm here to help you."
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If you haven't established a legal form (LLC, LLP, Corp, LTD, etc) of business with any secretary of state, then my understanding is that you should be fine.
 
Well, I emailed, called, etc. and finally got a response The service that I subscribe to has no information/guidance. It looks like I will have to read and follow the information in the links (thanks Jeff). The links are pretty thorough and being a CPA I understand the jargon. The only way to determine how to comply is to read the content. I have a LLC (which I was aboiut to dissolve anyway), so I will comply. As far as NFPs, I am assuming if they are exempt, you would find-out in the Exceptions section. Remember, this is an information gathering (gov't getting into your shorts exercise). so you will never be penalized for complying - they use taxing us to death and providing little value as their form of punishment. Like anything else, if you have nothing to hide - do your best to complete the form and file it. If you do have soemthing to hide, then you can roll the dice. However must gob't agancy systems are designed to assume/default-to that you must file. There is often a penalty for not filing and your duty deosn't go way just b/c you pay the penalty. And if you really hate your neighbor and want to make 3% on what the IRS finds you can complete the attached. This form as been aroudnfor decades. Turning your friends and family "in" started way b4 COVID. The govt loves for you to do their dirty work. BTW, if you don't want the 3%, just file anonymously.
 

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I just finished sudying the BOI reporting requirements. I do not see any small business as we know it for the purposes of selling pens/crafts for a profit (even if you don't make a profit) as being exempt. In my 20 plus year studying IRS regs and government compliance, I have never seen a more targeted attempt to aggressively investigate small businesses. I am going to file for ALL my clients even if there is a possibility of an exemption ( as I said I don't see any that woudl apply). The links that Jeff provided are excellent.
 
Just went to take care of this and see that there is a court order pausing this.

BOI e-Filing Alert: Please note that beneficial ownership information reporting requirements have been affected by a recent federal court order. The Department of the Treasury is appealing that order. In the meantime, reporting companies are not currently required to file a BOIR and are not subject to liability if they fail to do so while the applicable order remains in force.
However, reporting companies may still opt to file a BOIR.
 
Just got off the phone with my accountant and she said if you are LLc or corporation you need to file this form. They extended it till Jan 1 2026. Gives a chance for people to file taxes and talk with accountants and they can inform clients.
 
I filed many months ago.

As much as you, I also don't want the government in my private business when they don't need to be.

Having said this, it's also true that many people are dishonest and unethical.
Money laundering by pot and drug dealers, traffickers, gambling operations, illegals (especially gang members) is a real problem. Numerous small businesses have been caught.
In Florida, they did a sting on a number of small, independent arcade facilities which were large illegal gambling operations.

Honest people suffer because of criminals.
How many of you have been impacted by rising prices by streaming services?
Now, how many share your passwords with family or friends?—Don't answer but know this is a crime.

How many use Family and Friends for PayPal business transactions?
Yeah, that's not right either.

It was a small nuisance to file but I haven't had any problems or increased costs because of it.

If the government catches one—just one—of the numerous pedophile traffickers, I'd say it's worth it.
 
I completed 2 in less than 25 minutes online. Then (on 12/3) a court ruled it unconstitutional - too much Big Brother getting to far into the little guys ' "drawers". Here is the announcement directly from FINCEN. Presently, no due date has been set and no penalties will accrue if another court overturns the prior court's ruling. You can still voluntarily submit it (or arrange for one of the NJ drone-fleet for free pick-up!).
Happy to help anyone complete it. I am a CPA, BUT you don't have to be one. This had to be crafted by someone government lackey while sitting on the pot. Oddly enough, you need to upload your driver's licence -good for submitting unnessary forms but not for good for aything else. After all, they are so difficult to get these days. I guess those would don't know how to acquire an ID will get a "pass".


Here's the announcement:

Beneficial Ownership Information Reporting

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. More information is available on our website (https://www.fincen.gov/boi).
 
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