*On December 5th, 2024, the US District Court for the Eastern District of Texas granted a nationwide injunction on Beneficial Ownership Information Reporting Rule. Business owners should be aware that this should be regarded as a pause in the requirement that they submit and maintain their beneficial ownership information reports.
Business owners should keep in mind that this injunction could be lifted at any time and enforcement resumed. If you are hesitant about submitting your BOI report, you should monitor the situation carefully to determine whether the rule comes back into effect and consult with your attorney to determine whether you should file a BOI report.*
**UPDATE: On December 23rd, 2024, the stay was lifted – thereby requiring business owners to continue submitting BOI filings. Due to the injunction, FinCEN has extended the reporting deadline to January 13th, 2025.**
The Financial Crimes Enforcement Network (FinCEN) now requires some business and real estate owners to report any sale or transfer of their property. Business owners and real estate investors must be aware of these new regulations and understand when they need to submit a filing to FinCEN.
What is Beneficial Ownership Information Reporting?
Beneficial ownership information (BOI) reporting is a regulation aimed at curbing money laundering and terrorism financing. While this regulation introduces additional paperwork, complexities, and costs, it is crucial to comply with it to avoid penalties.
BOI reporting involves filing a report to FinCEN that details the owners of a business and the recipients of its profits. The report includes various pieces of information about the business and its owners. While this may raise concerns about privacy, FinCEN has assured that this information will remain private and will only be accessible to local, state, or federal agencies for law enforcement purposes.
Who is Required to Report to FinCEN?
As of 2024, individuals holding real estate in a business entity must report BOI information. If the real estate title is in your personal name, you are not required to report upon the sale or transfer. However, if the real estate is held in an entity such as a corporation or LLC, the owner must report any sale or transfer. An entity is essentially any type of business established by a state business filing.
New regulations proposed for 2025 may require reporting of transfers regardless of whether the real estate is held in an entity or personally.
The timing of your business or real estate acquisition also affects your reporting requirements:
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- Businesses Established After January 1, 2024: Owners have 90 days to file their initial BOI report.
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- Businesses Established Before January 1, 2024: There is a one-year grace period to file BOI reports, but they must be filed before January 1, 2025 (now January 13, 2025).
Implications for Real Estate Owners
FinCEN has considered the implications for real estate owners when creating these rules. Although additional paperwork costs time and money, FinCEN has simplified the process for obtaining a filing number and allows attorneys to file BOI reports on behalf of business and real estate owners. This helps streamline the filing process and keeps costs low.
Failure to file a BOI report can result in both criminal and civil penalties. Both individuals and their companies can be held responsible for not filing a BOI report.
It is important to monitor new laws which may apply to real estate owners and their continued ownership. The beneficial ownership information filing is not well known, and to this day, more laws are being created to gather information regarding the sale or transfer of real estate.
Need Assistance?
Are you required to file a beneficial ownership information report but aren’t sure where to start? Contact Modern Law today for a free consultation regarding beneficial ownership information reporting.