Overview
When Congress passed the Corporate Transparency Act, the law created a new “beneficial ownership information” reporting requirement, requiring all specified “reporting companies” to disclose certain beneficial ownership information (BOI) to the Financial Crimes and Enforcement Network (FinCEN).
Reporting companies are all entities formed or registered to do business in the United States by the filing of a document with a secretary of state or similar authority, unless they are considered exempt. FinCEN maintains a list of certain entities exempt from the BOI reporting requirements, including specified publicly-traded companies, many nonprofits, and certain large operating companies, among others.
Are sole proprietorships and rental activities reported on my personal income tax return covered by this reporting requirement?
- Maybe. If you registered your business with the secretary of state or similar authority, we encourage you to review the reporting requirements on FinCEN. If you’re unsure, review your state’s Secretary of State website and look up your business name. If it can be found, you may be required to report BOI.
- If you use LLC or LLP in your business name, you may have a reporting requirement. We encourage you to review the reporting requirements on FinCEN.
For reference, individuals often report business activity on these Form 1040 schedules (not an exhaustive list):
- Schedule C, “Profit or Loss from Business (Sole Proprietorship)”
- Schedule E, “Supplemental Income and Loss”
- Schedule F, “Profit or Loss From Farming”
It’s important that entities and individuals alike determine if their business activity could characterize them as “beneficial owners” who have BOI reporting requirements.
Reporting companies created or registered to do business in the U.S. before January 1, 2024:
- January 1, 2025
Reporting companies created or registered to do business in the U.S. on or after January 1, 2024:
- 90 calendar days to file after receiving actual or public notice that the company’s creation or registration is effective
🔗 Small Entity Compliance Guide
- provides examples and additional detail on reporting requirements
- answers specific inquiries FinCEN has received related to BOI reporting
- may be helpful for beneficial owners of multiple entities
- saves the necessity of uploading identification documents for each BOI report filed that has reported you as a beneficial owner
There is a potential risk of identify theft, as the information required to be reported to FinCEN is highly sensitive. We encourage you to be wary of third parties soliciting your business to complete the filing on your behalf. We also ask you to remain skeptical if you receive in the mail unfamiliar or unexpected forms to file that require a filing fee.
FinCEN Fraud Alert
“FinCEN has been notified of recent fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act.
The fraudulent correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code. Those e-mails or letters are fraudulent. FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages, or click on any links or scan any QR codes within them.”
KNOWN SCAM: “Form 4022, Mandatory Beneficial Ownership Reporting”
Individuals have reported receiving this blank, official-looking form from the “United States Business Regulations Department.” The form requests personal information and indicates a filing fee is due.
“Form 4022” is fraudulent:
- it is not a valid form with the federal government
- there is no federal “United States Business Regulations Department”
- there is no fee to submit your BOI information to FinCEN
- FinCEN offers e-filing options to maximize protection of personal information
- Click to see example of this fraudulent form
- one-page resource provides links to FinCEN resources and our recommendations for clients