Join our Raleigh area CPAs as they explain the effect of the Beneficial Ownership Information (BOI) report on small businesses, share the 4 filing requirements, and unveil the due dates and penalties associated with late filing.
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Protect Your Business and Avoid Penalties
As of 2024, the Corporate Transparency Act requires most businesses in the U.S. to report their beneficial ownership information to the Financial Crimes Enforcement Network. While this aims to increase transparency and combat financial crimes, it’s also created new opportunities for scammers.
If you’re a business owner, staying vigilant and understanding the potential risks surrounding these new reporting requirements is crucial when it comes to filing your taxes. Join our Raleigh area CPAs from Steward Ingram & Cooper PLLC as we outline common scams related to BOI reporting, helping you protect your small business from fraudulent schemes and avoid unnecessary penalties.
What is Beneficial Ownership Information (BOI)?
Beneficial Ownership Information (BOI) is the data that identifies individuals who directly or indirectly control or own a business. This information is crucial for increasing transparency and reducing financial crime, such as money laundering. Under the Corporate Transparency Act (CTA), businesses must report information to the Financial Crimes Enforcement Network (FinCEN). The government collects data from business owners to create a clear picture of who is behind U.S. companies.
Understanding the Corporate Transparency Act
The Corporate Transparency Act (CTA), passed as part of the National Defense Authorization Act in January 2021, represents one of the most significant changes to business reporting requirements in the U.S. in recent years. The goal of the CTA is to combat money laundering, terrorist financing, and other illicit financial activities by requiring U.S. companies to disclose detailed ownership information to the federal government.
While the law primarily targets shell companies and complex ownership structures, it will also affect many small businesses, including those in the Raleigh, NC area.
Effect of the Corporate Transparency Act on Small Businesses
The CTA affects small businesses in the following ways:
Reporting Requirements
Small businesses must disclose beneficial owners (those owning or controlling 25%+), including names, dates of birth, addresses, and ID numbers.
Compliance Burden
Business owners must collect, verify, and maintain detailed ownership data, adding an extra layer of compliance, especially for those without dedicated legal staff.
Penalties
Failure to file on time or provide accurate information can result in fines up to $500 a day, with a maximum of $10,000. Falsifying information may lead to criminal penalties.
Exemptions
Businesses with more than 20 employees and over $5M in revenue, or those already regulated, like banks, may be exempt.
Privacy Concerns
While the CTA aims for transparency, the data is not public and will only be shared with law enforcement under specific conditions.
Beneficial Ownership Information Reporting Requirements
To comply with BOI reporting, businesses must submit detailed personal information about their beneficial owners.
This includes:
Names
Full legal names of individuals who control or own the company.
Dates of Birth
The birthdates of the beneficial owners.
Addresses
Residential or business addresses for the individuals.
Identifying Numbers
Unique identifiers such as Social Security numbers, passport numbers, or driver’s license numbers.
The primary goal of BOI reporting is to enhance transparency in business ownership. By requiring companies to disclose who truly controls them, the government can more effectively identify illegal activities such as money laundering, tax evasion, or fraud.
Most U.S. companies must report their beneficial ownership information, though there are certain exemptions. Small businesses with fewer than 20 employees and less than $5 million in annual revenue may not need to report, but larger companies or those with more complex ownership structures must comply with the CTA. It’s important to verify whether your business is required to file a BOI report to avoid potential fines and legal issues.
Business owners must submit their beneficial ownership information through the official FinCEN website. The reporting system allows for secure e-filing, either by submitting an online form or uploading a completed PDF document. It is critical to file this information through the official channels to ensure that your data is kept safe and that it is properly recorded. Incorrect or incomplete filings can lead to penalties.
Here’s what you need to know about the beneficial ownership information report due dates:
- Existing Businesses (formed before January 1, 2024) Due Date: January 1, 2025
- New Business (formed after January 1, 2024) Due Date: Within 30 days of formation or registration.
- Updated Reports (for changes in ownership) Due Date: Within 30 days of any change in beneficial ownership.
- Fines: Up to $500 per day, with a maximum of $10,000 for failure to file on time.
- Criminal Penalties: For false or misleading information, including possible imprisonment.
Common Scams Targeting Beneficial Ownership Information Filers
With the implementation of the CTA and the requirement for businesses to submit Beneficial Ownership Information, scammers have seized the opportunity to exploit small business owners. These scams often appear convincing, using official-sounding language and urgent threats to manipulate individuals into providing sensitive personal information or making payments.
Business owners must remain vigilant and aware of the tactics scammers use to avoid falling victim to these fraudulent schemes. Below are some of the most common scams targeting BOI filers.
Request for Payment Scam
One of the most prevalent scams involves fraudulent requests for payment to “complete” or “process” the BOI report. Scammers will send official-looking invoices, often claiming that there’s a fee associated with filing the BOI report. The communication may appear to come from FinCEN or another government agency, but it is entirely fake.
Important to Know
There is no fee required to file the BOI report directly through the government’s official FinCEN website. Any email or letter requesting payment is a scam. Always report such requests to the authorities and make sure to file your BOI at no cost through the official FinCEN platform.
Fake Form 4022 Scam
Scammers have also been circulating fake documents, such as an alleged Form 4022, which they claim is needed to complete your BOI submission. The scam email or letter may seem legitimate, providing instructions to download and fill out the form. However, this form does not exist, and submitting any personal or business information through it would expose you to identity theft.
Important to Know
There is no Form 4022 required for BOI reporting. Only the official forms and submission methods provided by FinCEN are valid. Always double-check with FinCEN’s official website to ensure you’re using the correct forms.
QR Code and Custom URL Scam
In some cases, scammers include QR codes or custom URLs in emails, letters, or texts that appear to lead to an official BOI submission site. These links, however, direct you to fraudulent websites designed to capture your personal and business information. The fake site may look similar to the official FinCEN site, but it’s a ploy to steal your data.
Important to Know
Do not scan QR codes or click on links in unsolicited emails or messages. Always go directly to the official FinCEN website and manually enter the URL to file your BOI information. Be cautious about emails with embedded links or attachments from unknown senders.
Phone Scams
Scammers are increasingly using phone calls to intimidate small business owners into providing personal information. These calls may claim to be from government agencies, warning of severe consequences such as fines or even jail time for failing to submit Beneficial Ownership Information on time. They might pressure you to disclose sensitive information, such as your Social Security number or business details, under the guise of helping you complete your report.
Important to Know
The U.S. government will never call you to demand immediate payment or personal information regarding your BOI filing. If you receive such a call, hang up and report it to the authorities. Any legitimate requests for BOI submission will come through secure channels, not by phone.
Stay Compliant with Beneficial Ownership Information Report Requirements
Navigating the Corporate Transparency Act and the Beneficial Ownership Information Report requirements can be complex. Our team of CPAs in Raleigh is here to help you understand your obligations, ensure accurate filings, and avoid costly penalties. Whether you’re filing for the first time, updating your information, or seeking clarity on exemptions, we can guide you every step of the way.
Contact the accounting team at Steward Ingram & Cooper PLLC today to schedule a consultation by calling us at (919) 872-0866 or filling out the contact form below to get started.
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