Beneficial Ownership Information: Federal Reporting Requirements for Businesses & Nonprofits
What Is Beneficial Ownership Information Reporting?
Beneficial Ownership Information (BOI) reporting is the process of filing a report with the Financial Crimes Enforcement Network (FinCEN) that details the individuals who own or control a company. The Corporate Transparency Act (CTA) requires certain entities to file these BOI reports. The purpose of FinCEN is to safeguard the financial system from illicit activity and to promote national security through the strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence.
BOI Reporting On Hold – Again
Originally effective January 1, 2024, many companies in the United States were required to report information about their beneficial owners to FinCEN. A beneficial owner is any individual who directly or indirectly exercises substantial control over a reporting company or owns or controls at least 25 percent of its ownership interests. There is no maximum number of beneficial owners who must report to FinCEN.
Due to a nationwide injunction issued by a federal court, BOI reporting is temporarily on hold as of February 2025. This means that businesses are NOT currently required to file BOI reports with FinCEN; however, these reports can still be voluntarily submitted while the legal challenges are ongoing.
What’s Happening?
BOI reporting is currently being challenged in court, with plaintiffs arguing that the requirement is unconstitutional and places an undue burden on small businesses.
The case remains ongoing and is under appeal in the Fifth Circuit Court of Appeals.
The Future Is Unclear
Please be aware that the current injunction is preliminary and may be subject to modification or reversal based on future court rulings or legislative changes. FinCEN has indicated that businesses may continue to submit BOI reports on a voluntary basis.
What Information Does the BOI Report Require?
The BOI report requires beneficial owners to report certain information about themselves, the entities they own or control, and other information and certifications. The following must be reported:
- Information about beneficial owners: name, date of birth, address, and a unique identifying number from a U.S. passport, state driver’s license, identification document issued by a state, local government, or Indian tribe, or a foreign passport (if none of the above are available);
- Information About Entities: name and DBA, address, jurisdiction of formation and of registration (if a foreign entity), and a tax identification number;
- Other Information and Certifications: information about the company applicant(s), and certification by the individual filing the report with FinCEN.
Who Is Required to File a BOI Report?
Any entity that is required to file a BOI report is referred to as a “Reporting Company.” A company may need to report beneficial ownership information (BOI Report) to FinCEN if it is:
A corporation, a limited liability company (LLC), or was otherwise created in the United States by filing a document with the secretary of state or any similar office under the law of a state or Indian tribe; or
A foreign company that was registered to do business in any U.S. state or Indian tribe by such filing.
Who is Exempt from Filing a BOI Report?
The BOI reporting requirements do not apply to organizations that are:
Defined by section 501(c) of the federal tax code AND exempt from federal income tax under Code Section 501(a). This includes 501(c)(3),(4), or (5), organizations; Code section 527 political organizations; Code Section 4947(a) charitable trusts; Wholly owned subsidiaries of the nonprofits listed above, (however, if the exempt entity controls some, but not all, of the ownership interests of the subsidiary, the subsidiary is NOT exempt from the filing requirements).
Which Nonprofit Organizations Must Comply with BOI Reporting Requirements?
There are a few nonprofit organizations that must comply with the BOI reporting requirements. If the nonprofit organization falls under one of the following categories, they must file the BOI report:
Any nonprofit organization that loses its tax-exempt status must file a BOI report within 180 days from revocation by the IRS.
Any nonprofit organization that was organized in 2024, must file a BOI report within 90 days from the date of creation, unless it has received its tax-exempt status prior to the end of the 90-day filing deadline.
Any nonprofit organization with a pending tax-exempt application with the IRS must file a BOI report. Once the organization has been deemed tax-exempt with the IRS, the nonprofit organization will no longer be considered a reporting company.
Contact the California Center for Nonprofit Law for BOI Compliance Guidance
Every business needs a good lawyer, and nonprofit organizations are no exception. We have the expertise and experience to help your nonprofit organization grow and comply with all applicable laws and regulations. Call the California Center for Nonprofit Law today at (949) 892-1221, email info@NPOLawyers.com, or fill out our contact form to learn more about our services.
