Nichole Y. Shafer
Guest Columnist
Nowadays, all the entities and organizations make it difficult to discern who owns what. Sometimes, these entities have the goal of hiding the identities of the owners, behind the mask of the entity. However, the government is trying to cut back on the “tricksters” hiding behind businesses (that is all the Halloween puns I have for you).
Many other countries have business reporting requirements to ensure that the government knows who is who when it comes to business entities like LLCs and corporations. By the government knowing who is who, it is able to help curtail businesses that are not reporting their taxes and businesses that misuse their business creating “shell games” to commit crimes.
For decades the government has issued disclosure rules, changed the process on obtaining an employer/tax identification number and put limits on pay without telling ownership. Now, the U.S. Treasury Department’s Financial Crimes Enforcement Network has created a mandatory reporting requirement for entities that are established/organized with the Ohio Secretary of State.
This column has written about the new government business requirement way back in January. However, with the deadline quickly approaching, business owners can no longer sit tight and need to start acting or risk substantial fines and penalties (up to $500 per day).
Effective Jan. 1, 2024, many companies in the United States must report information about their beneficial owners (the individuals who ultimately own or control the company). This filing should be filed with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of Treasury.
The filing is a result of the Corporate Transparency Act passed by Congress in 2021 to help identify owners and direct and indirect controllers of companies.
If your company was created or registered prior to Jan. 1, 2024, you have until Jan. 1, 2025 to report BOI. This means that active entities that were organized prior to this year are not grandfathered in. You still need to report, and you have until the end of this year to do so.
BOI is not an annual filing, but whenever there are any changes to the beneficial ownership information, it is the company’s responsibility to update FinCEN.
There are also FinCEN reporting requirements for some entities that may not be officially organized through the Ohio Secretary of State, like some partnerships. There are exemptions to the reporting, for businesses that qualify for a specific exemption.
Many firms have been heavily monitoring this new regulation for months and have intentionally withheld sending out notifications until recently. This delay was due to the constantly changing regulations. Most recently, oral arguments were held to review the constitutionality of these regulations.
However, a decisive decision is not expected to be made on the legislation’s constitutionality until after the first of the year. Therefore, if you have been holding off, and you need to file for FinCEN, you will need to file or plan to have the filing completed for your business prior to Jan. 1, 2025.
Nichole Y. Shafer is an Ohio-licensed attorney at Schroeder Law LTD in Putnam County. She limits her practice to business, real estate, estate planning and agriculture issues in northwest Ohio. She can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.
