On October 3, 2024, the Financial Crimes Enforcement Network (FinCEN) updated its Frequently Asked Questions (FAQs) regarding Beneficial Ownership Information (BOI) under the Corporate Transparency Act (CTA).
These updates are critical for CPAs, lawyers, and compliance officers helping clients comply with new BOI reporting requirements. This guide provides detailed answers to the most significant updates, along with expert solutions from FincenFetch to streamline the process.
A. General Questions
A3. Under the Corporate Transparency Act, who can access beneficial ownership information?
FinCEN allows federal agencies, financial institutions, and law enforcement access to BOI for specific purposes, such as national security or customer due diligence. However, BOI remains exempt from disclosure under the Freedom of Information Act (FOIA) to protect the privacy of reporting entities.
B. Reporting Process
B7. Is a reporting company required to use an attorney, CPA, enrolled agent, or other service provider to submit BOI to FinCEN?
No, reporting companies are not required to use legal professionals. Most companies can submit their BOI reports independently using FinCEN’s guidance. However, professional assistance from CPAs, attorneys, or enrolled agents can be beneficial for more complex filings.
B8. Who can file a BOI report on behalf of a reporting company, and what information will be collected on filers?
Any authorized individual—whether an employee, owner, or third-party service provider—can file a BOI report. Filers must provide their contact information and certify the accuracy of the information.
B9. If a third-party service provider who is not an attorney submits a reporting company’s BOI to FinCEN, has that provider engaged in the unauthorized practice of law?
This is a critical question, especially for CPAs and service providers. The answer depends on state law. FinCEN does not prevent third-party providers (non-attorneys) from filing BOI reports if they are authorized to do so by the company. However, whether this constitutes unauthorized legal practice is determined by each state’s specific legal framework.
In most states, submitting factual data on behalf of a company may not constitute legal advice. However, if the service provider advises on specific legal issues, they could potentially be engaging in unauthorized practice. Companies and third-party providers should always ensure compliance with local regulations.
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B10. How do I report multiple beneficial owners or company applicants on one report?
FinCEN allows reporting of multiple beneficial owners or applicants in a single submission. When completing the BOI report online or in PDF form, users can add additional individuals by using the “Add Beneficial Owner” or “Add Company Applicant” button.
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C. Reporting Company
C17. What government offices are “similar offices” to a secretary of state for filing a reporting company?
“Similar offices” refers to any government department or agency that processes filings creating or registering a reporting company. This clarification helps ensure compliance across various state jurisdictions.
C18. Does a corporate conversion create a new reporting company that must file an initial BOI report with FinCEN?
Yes. When a company changes its legal structure (e.g., from LLC to corporation), it may need to file a new BOI report. Each entity created after a conversion must comply with the initial BOI reporting requirement.
C19. Does a reporting company need to file a BOI report each time it registers to do business in another state?
No. Companies only need to file one BOI report when initially creating the entity. Registration in additional states does not require a new BOI report, but changes to the business structure or beneficial ownership may trigger update requirements.
D. Beneficial Owner
D1i. How many beneficial owners can a reporting company have?
There is no maximum number of beneficial owners. Companies must report every individual who exercises substantial control or owns at least 25% of the company.
D1ii. What if a reporting company does not have any individuals who own or control at least 25 percent?
Even if no individual holds 25% or more ownership, FinCEN requires reporting of individuals who exercise substantial control over the company.
D18. If one spouse has an ownership interest in a reporting company, is the other spouse also a beneficial owner if the company is registered in a community property state?
Yes, in community property states, both spouses may be considered beneficial owners if they collectively hold substantial control or ownership.
F. Reporting Requirements
F5i, F5ii, F15. What identification documents are acceptable for BOI reporting?
State-issued IDs, passports, or other government-issued identification must be submitted for beneficial owners and company applicants. These documents must be current and valid.
F12. What address should a reporting company report if it lacks a principal place of business in the U.S.?
Companies without a principal U.S. business location must report the address of their registered agent or the primary U.S. location where they conduct business.
F14. Can individuals enrolled in address confidentiality programs provide their ACP-issued address for BOI reporting?
Yes, individuals participating in an Address Confidentiality Program (ACP) can use their ACP-assigned address for BOI reporting to protect their privacy.
L. Reporting Company Exemptions
L3i, L6. Does a subsidiary whose ownership interests are partially controlled by an exempt entity and partially controlled by a non-exempt entity qualify for the subsidiary exemption?
No, subsidiaries must be fully owned by one or more exempt entities to qualify for the exemption. Partial ownership by a non-exempt entity disqualifies the subsidiary.
L10. Are Pooled Investment Vehicles (PIVs) exempt from BOI reporting?
Yes, provided that the PIV meets certain conditions, such as being managed by an exempt entity.
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L11. Can companies operating from a personal residence use the residential address as the business address for BOI reporting?
Yes, companies operating from personal residences may use that address as the business address when filing BOI reports.
M. FinCEN Identifier
M2, M5i. How can I use a FinCEN identifier, and what updates are required?
A FinCEN identifier can be used instead of personal information when submitting BOI reports. If there are changes to the beneficial owner’s information, the company must update the FinCEN identifier within 30 days.
N. Third-Party Service Providers
N4. Can third-party service providers file BOI reports on behalf of companies?
Yes, authorized third-party service providers, such as CPAs or attorneys, can submit BOI reports for companies. Providers must keep accurate records and ensure compliance with FinCEN’s regulations.
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