Critical IRA/LLC Legal Requirement – FinCEN and BOI Reports
*All BOI reports are due 12/31/2024
There is a new federal legal requirement that requires LLCs and Corporations to file a Beneficial Ownership Information report to a federal government agency called FinCEN. This new law also applies to IRA-owned LLCs. For LLCs or corporations set up before 2024, this filing must be completed by December 31, 2024. The penalty for failing to file is $591 per day, and there is even jail time in the event of willful failure to file. It is important that all owners of LLCs and corporations file their BOI to comply with this law. The purpose of the law was to identify ownership and control of LLCs and corporations to combat money laundering and unlawful uses of entities. Most LLCs and corporation owners have numerous questions about the BOI and I have answered the most common ones below and provided additional resources to make sure you are informed on this critical new requirement.
What is reported on the BOI report?
The BOI report contains the name of the entity, its address, and federal EIN/Tax ID. Then it identifies anyone who owns 25% or more of the entity or who has substantial control of the entity (e.g., a manager or officer). These owners or persons with control must report their name, address, and provide a government-issued ID (driver’s license, passport, etc.).
When is the BOI report due?
For entities set up before January 1, 2024, the deadline is December 31, 2024. For entities set up in 2024, the deadline is 90 days after the entity is approved with the state.
Whom do I list as the owner if my LLC is owned by my IRA?
FinCEN clarified this question for entities owned by IRAs or custodial accounts and stated that the individual owner of the IRA or custodial account (e.g., you for your own IRA) should be listed on the BOI and not the IRA custodian or the account itself. The purpose of the BOI is to identify the true underlying ownership of entities. So, for example, if your LLC is owned by your IRA at Directed IRA and if you are the manager, then you would personally be listed as a 25% or more owner, and you would also be listed as someone with substantial control as the manager. Directed IRA would not be listed on the LLC’s BOI report.
Who can access these BOI reports?
BOI reports are not publicly available and are not searchable or available for viewing online. The BOI reports information is confidential and isn’t even available to states or government agencies other than FinCEN and the Department of Treasury. FinCEN will only release a BOI report upon a court-ordered subpoena.
What is the cost to file the BOI report?
There is no filing fee with FinCEN, and you can file it yourself online at www.fincen.gov/boi.
Do I have to file this every year?
No, this is a one-time filing. However, it must be amended in the event that information on the BOI changes (e.g., change of address of a company or of any owner).
Can I hire someone else to file this for me?
We do not provide this service at Directed IRA. Your attorney, accountant, or other professionals may provide this service. KKOS Lawyers is filing BOIs for their clients and charges $250. Also, many Directed IRA account owners use Main Street Business Services (a company Mark J. Kohler and I own that provides entity compliance and registered agent services) to handle their company compliance for their LLCs or corporations. The company compliance service at Main Street Business Services includes filing the BOI, handling your state renewal each year, and preparing annual minutes for your entities for an annual fee of $200. Learn more here.
Wasn’t this law ruled unconstitutional?
This new law and the BOI filing requirements were ruled unconstitutional by a federal district court in Alabama in the Spring of 2024. However, the court’s ruling only applied to the plaintiffs in that case. The case is on appeal and is working its way through the federal appellate courts. FinCEN has issued notices making it clear that everyone else must timely file their BOI report.
Where can I learn more about this new requirement?
Mark J Kohler and I completed a webinar on the Corporate Transparency Act and have a Corporate Transparency Act resource center which you can find here. Also, FinCEN has a comprehensive BOI FAQ that is helpful and that you can find here.
This new federal filing requirement comes with stiff penalties, so we wanted to make sure every customer at Directed IRA is aware of these rules and how they apply to IRA-owned LLCs or any company where you or your IRA own 25% or more or where you are in substantial control (e.g., manager of LLC or officer/director).
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