BOI Latest Updates for Dissolved and Disregarded Entities

As the deadline for filing Business Ownership Information (BOI) reports approaches, businesses must ensure compliance with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Understanding the specific requirements and recent updates is critical to avoid severe penalties.

Filing Deadlines

Businesses that existed on January 1, 2024, are required to file their BOI reports by January 1, 2025. New businesses established in 2024 have a 90-day window from their filing date with the state’s secretary of state. This requirement applies to all limited liability companies (LLCs) and corporations, meaning that multiple entities, such as separate LLCs for rental properties, each necessitate individual reports.

Penalties for Non-Compliance

The stakes for failing to file are significant. Businesses can incur penalties of $591 for each day they are late, with potential additional criminal penalties up to $10,000 and possible imprisonment for up to two years.

Key Updates from FinCEN

1. Determining Company Existence: A business is not required to report if it ceased to exist before January 1, 2024. To qualify for this exemption, the company must have completed all dissolution steps, including filing necessary paperwork, paying taxes, ceasing business activities, and liquidating its assets. If any of these steps were incomplete after January 1, 2024, the company must file a BOI report.
2. BOI Reporting for New Entities: Companies created or registered after January 1, 2024, must file their BOI reports even if they dissolve before the reporting deadline. This underscores the importance of understanding the timeline and obligations from the outset of a company’s formation.
3. Administrative Dissolution Not Equaling Dissolution: An entity that is administratively dissolved (e.g., for failing to pay fees) does not automatically cease to exist legally unless the dissolution is permanent. This is crucial for determining ongoing reporting requirements.
4. No Additional Report Needed for Cessation: Once a company files its initial BOI report, it does not need to file another report stating that it has ceased to exist, which simplifies the reporting process for companies that dissolve shortly after filing.
5. Tax Identification Numbers (TINs): Disregarded entities, which are not treated as separate for U.S. tax purposes, must report BOI using a valid TIN. Acceptable forms of TINs include Employer Identification Numbers (EINs), Social Security Numbers (SSNs), or Individual Taxpayer Identification Numbers (ITINs). Foreign entities without a TIN should provide a tax identification number from their jurisdiction.
6. Obtaining a TIN: Businesses can apply for an EIN through a free online application. The IRS typically provides EINs immediately upon submission; however, it can take longer for applications submitted via fax or mail. Businesses should plan accordingly to avoid delays that could impact their ability to file BOI reports on time.
7. Updating Identification Information: If a beneficial owner’s identifying number changes—such as renewing a U.S. passport—the business must submit an updated BOI report within 30 days, including the new passport number and an image of the passport. Conversely, renewing a driver’s license does not trigger an update if the number remains the same.

Key Takeaways

• No Reporting Requirement for Pre-2024 Dissolved Companies: Companies that were fully dissolved before January 1, 2024, do not need to file a BOI report.

• Mandatory Reporting for Recent Entities: Any entity created or active after January 1, 2024, is required to file, regardless of its operational status at the time of reporting.

• Understanding Jurisdictional Compliance: Administrative failures do not equate to legal dissolution, which can affect reporting obligations.

• Timely Reporting: Disregarded entities must ensure accurate reporting using appropriate TINs. Keeping records of efforts to comply with BOI requirements is advisable.

In conclusion, it is vital for businesses, especially those with complex structures, to stay informed about BOI reporting requirements and deadlines to avoid severe penalties. Consulting with legal and tax professionals may further enhance compliance and mitigate risks.