In an industry full of regulations, it can be difficult for owner-operators to keep track of them all. And the addition of a new requirement for businesses to file beneficial ownership information has created a wrinkle that is confusing to many truckers.
For carriers created before the start of 2024, the deadline to complete a beneficial ownership information (BOI) report will be here before you know it. The following is a who, what, where, when and why for filing it.
The what and why of BOI
In 2021, Congress passed the bipartisan Corporate Transparency Act with the goal to “combat illicit activity including tax fraud, money laundering and financing for terrorism.” In turn, the CTA created a new mandate requiring most businesses to report beneficial ownership information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The purpose of this, according to the agency, is to “make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.”
“The launch of the United States’ beneficial ownership registry marks a historic step forward to protect our economic and national security,” Secretary of the Treasury Janet Yellen said in a statement. “Corporate anonymity enables money laundering, drug trafficking, terrorism and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage.”
According to Yellen, the department’s ability to maintain a centralized database of beneficial ownership information will help to “eliminate critical vulnerabilities in our financial system,” making illicit financial activity harder to conceal and easier to quash.
Reporting companies are required to disclose information about their business, such as legal names and DBAs, current address and taxpayer identification numbers. Additionally, businesses must report the legal name, date of birth and current address of any beneficial owners, along with providing valid identification for each individual.
As for who will have access to beneficial ownership information reports, FinCEN will allow federal, state, local and tribal officials, as well as certain foreign officials who submit a request through a U.S. government agency, access to the information for “authorized activities related to national security, intelligence and law enforcement.”
Additionally, financial institutions will be granted access to beneficial ownership information reports in certain circumstances, with the consent of the reporting company.
Who needs to file?
If you are unsure as a small-business owner whether you need to complete a beneficial ownership information report, Shasta May, founder of MBA Tax and Bookkeeping Service, said the answer is most likely “yes.”
“With trucking, (most) small businesses … are going to have to file this report,” May told Land Line Now. “It’s really the large businesses that don’t have to – with 20 or more employees grossing $5 million or more – really large companies. So, this is really affecting the small-business owner.”
The Corporate Transparency Act dictates that all corporations, LLCs or entities created “by the filing of a document with a secretary of state or any similar office under the law of a state of Indian tribe” must complete a beneficial ownership information report.
Both beneficial owners and company applicants must be disclosed in the report. The agency considers any individual who owns or controls a minimum of 25% of a company or has substantial control over the company to be beneficial owners. A company applicant is any person who “directly files or is primarily responsible for the filing of the document that creates or registers the company.”
Currently, 23 types of companies are exempt from beneficial ownership information reporting requirements, including publicly traded companies meeting specified requirements, many nonprofits and certain large operating companies. A complete list of exemptions can be found here.
When and where do you need to file?
When a company needs to complete its filing depends on when it was created.
Any company created or registered to do business before Jan. 1 of this year will have until Jan. 1, 2025 to make its initial beneficial ownership information report.
For companies created in 2024, a beneficial ownership information report must be filed within 90 days of a company’s creation or registration. According to the department, that 90-day window starts “from the time the company receives actual notice that its creation or registration is effective or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.”
Lastly, companies created after Jan. 1, 2025 will have 30 days from their registration-effective date to complete the report.
Failing to complete the filing by the required deadlines – or providing false or fraudulent information – can result in civil penalties of up to $500 for each day the violation continues, as well as criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000.
It should be noted that this is not an annual report. Companies will be required to file only once, unless there is a need to update or correct any of the information in the report. Any updates to the beneficial ownership information report must be completed within 30 days of the changes occurring.
Companies can complete their beneficial ownership information reports online here. There is no fee to file online, which is something Barry Fowler of Taxation Solutions suggests for all owner-operators.
“I’m sure in the next month or two, you’re going to hear, ‘We can do it for you; it only costs X number of dollars to do it.’ Go online and try to do it yourself,” Fowler said. “Being an owner-operator, you’re always looking at ways of keeping your expenses down. Don’t incur an expense (for something) that you can do in what appears to be a short amount of time.” LL
Listen to Land Line Now’s full conversation with May and Fowler about beneficial ownership information below.
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