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** Please note, tru Independence does not provide tax or legal advice. The following is for informational purposes only.As the Chief Compliance Officer for tru Independence and it's affiliated independent RIAs, it is paramount that we stay attuned to rules and legislation that effect our industry, and in-turn interpret what these rules mean for our clients.
Just recently, 2 new rules will be taking affect that will require the attention of all RIA business owners, and if you qualify, you may need to take action. These rules are the Beneficial Owner Information (BOI) Rule and the Corporate Transparency Act (CTA).
Below is an FAQ to bring you up-to-speed. Please consult with an attorney or tax consultant to understand if and how these rules may effect your firm.
What is the Corporate Transparency Act and the New Beneficial Owner Rule?
The Corporate Transparency Act (CTA) went into effect on January 1, 2024, requiring certain United States entities to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This mandate is part of a broader effort to increase transparency and compliance within our industry.
The Beneficial Owner Rule (BOI) require you provide essential information about the reporting company, such as their legal name, mailing address, and employer identification number. Additionally, the company must disclose key information about its beneficial owners, such as their name, birth date, address, and unique identifying number from a driver’s license, passport, or state-issued identification.
Who Needs to Report
An RIA that is an LLC is EXEMPT from the rule, but if you have an LLC or S-Corp outside of the RIA, it may apply to you. This may also apply to other LLCs you may be a beneficial owner of. Please check with your attorney or tax consultant to see if you must file.
What Will I Need to Provide?
For this filing, you must provide details for each beneficial owner, including their legal name, birth date, home address, identifying numbers from licenses, state IDs, or passports, and an image of the associated document. As a reminder, a beneficial owner is any individual who directly or indirectly exercises control over the reporting company or directly or indirectly owns or controls 25% ownership interests of the reporting company.
In addition to beneficial owner information, you must provide company details such as its legal name, any "doing business as" (d/b/a) names, jurisdiction information, and taxpayer identification number.
How often are BOI reports filed?
A BOI report does not expire, so no annual reporting requirement exists. However, if information on a BOI report changes, a company has 30 days to submit corrections or updates.
What happens if I do not file?
Willful failure to complete a BOI report could subject the person who violates the reporting requirements to a civil penalty of up to $591 for each day that the violation continues or has not been remedied, and may include a fine of up to $10,000 and/or imprisonment.
Action Required
If you are required to file, you must complete the Beneficial Owner Disclosure Form detailing the individuals with significant ownership interests. In addition to the form, you must provide the necessary documentation to verify the ownership information. The form is located here: https://boiefiling.fincen.gov/.
For more information on how to file, please visit the following link: https://www.fincen.gov/boi.
If you are a tru Independence client and have questions, please reach out to compliance@tru-ind.com.