FinCEN Releases Form of Beneficial Ownership Information Report

On September 29, 2023, FinCEN issued a request for comments on its revised form of Beneficial Ownership Information Report (“BOIR”).  The release is open for comments until October 30, 2023. 

Previous Form of BOI Report Criticized

FinCEN had previously issued a proposed form of BOIR that was widely criticized. Among other things, “commenters were uniformly critical of the checkboxes that would allow a reporting company to indicate if certain information about a beneficial owner or company applicant is “unknown,” or if the reporting company is unable to identify information about a beneficial owner or company applicant. Commenters referred to these checkboxes as the “unknown checkboxes.” A significant number of these comments expressed concern that the checkboxes would incorrectly suggest to filers that it is optional to report required information, and that reporting companies need not conduct a diligent inquiry to comply with their reporting obligations. These commenters requested that FinCEN remove all such checkboxes.” 

New Form of BOI Report Eliminates “Unknown Checkboxes” 

In response to the comments, FinCEN is pursuing a revised approach to the BOIR Form that will not contain unknown checkboxes. Instead, FinCEN announced a new BOIR Form that will require every field to be complete. FinCEN also announced, however, that if its experience in 2024 demonstrates that filers have problems obtaining all the required information, FinCEN may “consider an alternative implementation.”  This “alternative implementation” wold allow filers to specify a one of a select few reasons why they are unable to provide a piece of information about a beneficial owner (for example, “BO Unresponsive,” “BO Refused to Provide,” or “Third Party Refused to Provide.”) These drop-down boxes would not be included in the other sections of the form (i.e. the sections that require information about the reporting company and the company applicant).

FinCEN May Consider Alternative Implementation

In its September 29 announcement, FinCEN provided both its proposed BOIR as well as a template for its “alternative implementation.” FinCEN stated that its potential adoption of the alternative implementation will be “informed by feedback from stakeholders” and “any decision to adopt the alternative implementation with the drop-down options should it be pursued at all, would only be made after careful analysis of the initial implemtnation” and that “FinCEN will issue guidance well in advance of any change.”  FinCEN wrote that “there will only ever be one of the implementations “live” that filers can see and use.”

Beginning January 1, 2024, filers will be able to submit a BOIR via FinCEN’s online portal or through an Application Programming Interface or “API.” FinCEN has not yet issued the technical specifications for its API or announced when it will be made available.

Once implemented, a filer will need to submit a BOIR that includes all the required fields. If a field is “left blank, whether intentionally or accidentally, [FinCEN’s system] will prevent the filer from submitting their BOIR Form.”

Other Noteworthy Aspects of the Form of BOI Report. 

First, if a reporting company has previously filed a BOI Report and then becomes exempt, the reporting company must file an amendment that indicates it is a "newly exempt entity." This disclosure will go into line 1.d. of the BOI Report  FinCEN wrote that the reporting company must complete lines 1.e. through 1.h. when it is newly exempt, but no other lines.

Second, when filing an amendment, the amendment must indicate whether the amendment is provided to "correct prior report" (because information previously submitted was inaccurate or incomplete) or to "update prior report" (because there was a change in beneficial ownership information). See lines 1.b. and 1.c.

Third, the BOI Report anticipates that some reporting companies (that are single-member LLCs) may utilize the single owner's SSN and may not have an EIN. Where applicable, the reporting company must provide the owner's SSN if the reporting company does not have an EIN in line 1.f. of the BOI Report. 

Fourth, if the reporting company is a foreign reporting company it must submit its tax identification number from the jurisdiction of its organization in line 1.g. 

Fifth, if a reporting company is a "foreign pooled investment vehicle," the reporting company will not need to disclose its individual beneficial owners but instead must information with respect to “the individual who has the greatest authority over the strategic management of the entity." 

Sixth, if the reporting company is a foreign company that is registered to do business in more than one U.S. state, the reporting company must indicate the U.S. jurisdiction in which the reporting company was first registered to do business in the U.S. This information goes into line 10 of the form. 

Seventh, if the reporting company is a domestic company that was formed by the filing of a document in a Tribal Jurisdiction, the reporting company must indicate the Tribal Jurisdiction in line 10.c. There is going to be a list of acceptable Tribal Jurisdiction provided on the FiNCEN website. If the Tribal Jurisdiction is not on the list, line 10.c. should report "Other Tribe". 

Eighth, if a Beneficial Owner is a minor child, the reporting company must provide PII for one parent or guardian of the minor child. If applicable, the reporting company must check the box in line 33 before providing the parent or guardian's PII. 

Conclusion

Reporting companies formed before January 1, 2024 will have until January 1, 2025 to file an initial BOI Report. Nevertheless, attorneys representing reporting companies should begin now to communicate these new requirements to their clients and begin the process of evaluating how they will comply with their Corporate Transparency Act obligations.