In focus - New US ‘Beneficial Ownership Information Reporting’ (BOIR) requirements
EY Private Client Services
Providing private clients and business owners with the insight needed to solve complex international tax issues
From 1 January 2024, many US companies and entities doing business in the US will need to provide new informational reporting on their beneficial owners. This new requirement became effective as part of the Corporate Transparency Act (CTA) and applies to certain entities and their beneficial owners. The rules are enforced by FinCEN, a bureau of the US Department of Treasury.
Whilst EY are unable to directly assist with BOIR reporting, we wanted to raise awareness of this recent change so that impacted owners and managers may seek the appropriate advice and take the necessary actions in advance of the relevant deadline(s).
Although this does not directly affect individuals, those with substantial control of a reporting company should be interested and aware of these rules as their personal information will now be disclosed.
Why were these new rules required?
The BOIR provisions were created to enable the US to identify the beneficial owners of certain entities doing business in the US. This is to assist in protecting US national security and the US financial system from illicit use whilst combating illegal activities, money laundering, etc.
Who should be interested?
The rules apply to reporting companies. These include both US domestic entities created in the US by filing a document with a Secretary of State such as corporations and LLCs, as well as foreign entities who are registered to do business in any US state should be interested. Certain entities are exempt from filing. The beneficial owners (i.e., individuals with substantial control) of each reporting company should also be interested as their personal information will be disclosed.
What information is required?
A reporting company will need to provide certain information relating to the entity as well as the beneficial owners of the entity. Generally, beneficial owners are those that own at least 25% of an entity as well as those that have control over the entity regardless of ownership. In the case of beneficial owners that are minors (generally under the age of 18), their parents or guardians should be reported as the beneficial owner.
The BOIR includes details on the entity (name, address, etc.) to identify itself and information about each of its beneficial owners (name, address, DOB, identification number, as well as a photocopy of their identification (passport, driver’s license, etc.)). Reporting companies created from 1 January 2024 will also need to provide information on the person filing the BOIR on behalf of the company or beneficial owner.
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What are the deadlines?
Reporting companies created or registered before 1 January 2024 will have until 1 January 2025 to file their initial reports. Reporting companies created on or after 1 January 2024 will have 90 days from creation or registration to file their initial reports. Reporting companies established from 1 January 2025 will only have 30 days.
Any updates or revisions to an initial report made must be reported within 30 days. Updates or revisions that trigger reporting requirements are any changes in beneficial owners or their reported information – examples include change of persons in control, changes of ownership via sale or gift, and address changes.
Can penalties be assessed?
Wilfully failing to file BOIR or provision of false information can result in significant financial and criminal penalties.
Who can help?
Unfortunately, EY tax is not permitted to advise on or assist with the BOIR as providing technical advice on CTA may rise to the practice of law. As accountants and tax advisors, we are unable to provide legal advice. Please seek appropriate US legal advice for any further queries.
More information
If you believe you may be a beneficial owner of a reporting company or connected to a reporting company, we recommend you consult the agent or lawyer who assisted in establishing the US entity or registering it to do business in the US. In addition, the below links may be of assistance:
EY Partner (Seconded to EY Private Client Services Limited) | Advising UHNW clients on the interaction of US/UK personal taxes to ensure costly mistakes are avoided.
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