FinCEN Publishes Small Entity Compliance Guide and Proposes Time Filing Extensions

By Leo Parmegiani, CPA, MST, Partner

As previously reported in November 2022, the Financial Crime Enforcement Network (FinCEN) issued final rules related to disclosure requirements for certain U.S. entities . The rules stated objectives are to prevent and mitigate fraud and crimes, such as money laundering, tax evasion and other unlawful activities. The final rules are effective this coming January 2024 and will require certain entities to provide information about their beneficial owners by filing a Beneficial Ownership Information (BOI) Report.

At this juncture, substantial time has passed and, although federal agencies have extended a significant effort to publicize the report requirements, many businesses remain unaware of their obligations. FinCEN, in turn, has provided additional guidance on the disclosure requirements, as well as a proposed rule that would provide a small amount of additional time to file for entities created or registered in 2024.

Small Entity Compliance Guide

In response to this lack of awareness and confusion as to who must file, who are exempt and what is the actual due date for the reports, FinCEN has recently published a Small Entity Compliance Guide. This guide will help small businesses navigate the new rules for reporting beneficial ownership information (BOI), answers key questions and includes interactive tools and checklists to assist companies with their compliance.

There are six key questions the guide addresses to help companies comply:

• Does my company have to report its beneficial owners?
• Who is the beneficial owner of my company?
• Does my company have to report its company applicants?
• What specific information does my company need to report?
• When and how should my company file its initial BOI report?
• What if there are changes or inaccuracies in reported information?

In the guide, FinCEN describes a company’s beneficial owners as the persons “who ultimately own or control the reporting companies” and state that disclosing information about them will “help law enforcement and national security agencies prevent and combat money laundering, terrorist financing, tax fraud and other illicit activity, as well as protect national security.”

Report Filing Deadlines

Companies will be able to file their BOI report to FinCEN on January 1, 2024, when the requirements become effective. Reporting companies created or registered to do business before January 1, 2024 will have additional time until January 1, 2025 to file their initial BOI reports.

Reporting companies created or registered on or after January 1, 2024 will have 30 days after receiving notice of their company’s creation or registration to file their initial BOI reports. This rule creates an immediate requirement for newly formed entities to file their initial BOI report. (See proposed relief below.)

Notice of Proposed Rulemaking

On September 27, 2023, FinCEN proposed amending the beneficial ownership information (BOI) reporting rule (Reporting Rule) to extend the filing deadline for certain BOI reports.

Under the current Reporting Rule, entities created or registered on or after the effective date of January 1, 2024, must file initial BOI reports with FinCEN within 30 days of notice of their creation or registration.

The proposed amendment would extend that filing deadline from 30 days to 90 days for entities created or registered on or after January 1, 2024 and before January 1, 2025, to give those entities additional time to understand the new reporting obligation and collect the necessary information to complete the filing. The extension applies to both domestic and foreign entities registered in the United States.

FinCEN indicates in its proposed rulemaking that the goal of the extension is to provide more time for new companies to understand their obligations, gather the necessary information to do so and to resolve questions regarding the filings.

Entities created or registered on or after January 1, 2025 would still have only 30 days to file their BOI reports with FinCEN.

Further IRS Outreach

For the same concerns, the U.S. Treasury Department plans to publish videos on YouTube, hold meetings, host webinars, and take other steps to inform small businesses and other legal entities about their upcoming obligation to report their beneficial ownership information, as stated by a Treasury official at a recent industry conference.

Andrea Gacki, the director of Treasury’s Financial Crimes Enforcement Network (FinCEN) said, “In short, we are going all out to hit all forms of media to educate about beneficial ownership information reporting, “during an event held by the Association of Certified Anti-Money Laundering Specialists (ACAMS). Further stated, “Not only will we be leveraging the web and a YouTube series … but also leveraging every other type of outreach — through our website, through partnerships with different public affairs outfits, we are definitely trying to get the message out.”

Contact Us

PKF O’ Connor Davies tax experts are closely monitoring developments in this area and are ready and prepared to assist our clients navigate these new filing obligations. If you have any questions or concerns, please contact the partner in charge of your account or:

Leo Parmegiani, CPA, MST
Partner
212.867.8000 | lparmegiani@pkfod,com