Many people are learning, with some exasperation, that they need to file a report with FinCEN for their small business LLC or corporation. This new hassle requires (with numerous exceptions) anyone with more than a 25% beneficial or controlling ownership interest in a LLC or corporation to upload a copy of their drivers license with a finicky form to FinCEN within 90 days of business formation or by January 1, 2025. After that date, businesses will have only 30 days from formation to file.
Note that as of 12/3/24, enforcement actions under the Act requiring this filing was enjoined nationwide by a district court judge in Texas. That decision, Texas Top Cop Shop v. Garland, et al, U.S. District Court for the Eastern District of Texas, No. 4:24-cv-00478, is being appealed. It is generally recommended that companies comply with the law in the interim.
Steven Law Firm has handled this task for many business owners, but in many cases such as having a single-member LLC the filing is not that difficult to do yourself.
For businesses with multiple owners, businesses with trusts holding a meaningful number of shares or membership units, and more complex multi-tiered ownership arrangements, it can get complicated, fast. FinCEN has published a helpful guide to assist an intrepid business owner in figuring it out on their own, but in some cases the assistance of an attorney with filing the BOI report is advisable.
One comment about the failure to file. On the face of things, failing to file may have serious consequences:
- The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.
Up to two years of imprisonment in a federal penitentiary for not sending in a document? One should never fail to do what the federal government instructs one to do, but for those who never got the news that this filing is required until it was too late, there may be some respite in the fact that the government used "willful" as a mental state.* This may create a basis to defend against a failure to file for some officers who the government cannot show "voluntarily and intentionally" failed to register, with a specific intent not to do so. But getting to the point of having to defend a failure to file BOI case is not a wise use of anyone's time.
With that in mind, if you are already reading this you have an awareness of the need to report, so let's help you get started.
You will need:
- To determine if your business needs to file. If the formation of your business required filing with the Secretary of State, you probably do.
- To determine each beneficial owner of the business required to file, potentially including other business entities and their owners.
- For each individual, photograph or scan a copy of their drivers license or state ID card.
- Obtain the EIN of the reporting business entity, or other tax ID.
- Visit the filing site and complete the forms. Many people have had difficulties with the online submission form. The PDF version is slightly less irksome, you should visit the main filing page to download the latest PDF and only use the official Adobe Acrobat Reader to prepare it. Paper forms are reportedly available in some places, but we have not found them online as yet.
Good luck, and come on back if you decide you'd rather let the pros handle it.
* An act is done "willfully" if done voluntarily and intentionally and with the specific intent to do something the law forbids. There is no requirement that the government show evil intent on the part of a defendant in order to prove that the act was done "willfully." See generally United States v. Gregg, 612 F.2d 43, 50-51 (2d Cir. 1979); American Surety Company v. Sullivan, 7 F.2d 605, 606 (2d Cir. 1925)(Hand, J.); United States v. Peltz, 433 F.2d 48, 54-55 (2d Cir. 1970),cert. denied, 401 U.S. 955 (1971) (involving 15 U.S.C. § 32(a). See also 1 E. Devitt, C. Blackmar, M. Wolff & K. O'Malley, Federal Jury Practice and Instructions, § 17.05 (1992). (Justice Manual, Oct. 2024)