Part V: What Are the Penalties for Failing to Register My Company's BOI with FinCEN?

Welcome to our final installment of the BOI series! If you missed Part IV, we discussed the type of information your entity will be required to report in the BOIR to FinCEN. Then, we analyzed who is considered a "company applicant" and when you must report your company applicants to FinCEN. Today, we will wrap up the series by discussing the penalties for failing to comply with the reporting requirements.

There are different registration deadlines depending on when your entity was created or registered with a jurisdiction's Secretary of State or equivalent office. The three different deadlines are as follows:

1. A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.

2. A reporting company created or registered in 2024 will have 90 calendar days to file after receiving actual or public notice that its creation or registration is effective.

3. A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.

Most entities will fall into the first category, as they were already in existence prior to 2024. In this scenario, the entity has until January 1, 2025 to file its initial BOI report.

The penalties for failing to register your BOI are severe and can include both civil and criminal repercussions. Pursuant to the Corporate Transparency Act, a willful violation of the BOI reporting requirement may lead to up to $500 for each day that the violation continues. However, this amount is adjusted annually for inflation and as of 2024, is currently $591/day. Both individuals and corporate entities can be held liable for willful violations. This includes not just the individual who actually files (or attempts to file) false information with FinCEN, but can also include anyone who willfully provides the filer with false information to report.

Both individuals and corporate entities may also be liable for willfully failing to report complete or updated beneficial ownership information; in such circumstances, individuals can be held liable if they either cause the failure or are a senior officer at the company at the time of the failure.

Additionally, a person who willfully violates the BOI reporting requirements may be subject to criminal penalties of: (1) up to two years imprisonment; and (2) a fine of up to $10,000. Potential violations include: (1) willfully failing to file a beneficial ownership information report; (2) willfully filing false beneficial ownership information; and (3) willfully failing to correct or update previously reported beneficial ownership information.

The financial penalties for willfully failing to file your BOI report or for willfully providing false information are significant.

However, should a person willfully fail to report complete or updated beneficial ownership information to FinCEN as required under the Reporting Rule, FinCEN will determine the appropriate enforcement response in consideration of its published enforcement factors. It is important to note that senior officers of an entity that fails to file a required BOI report may be held accountable for that entity's failure to do so.

Lastly, I just want to leave you with a reminder that while there is no annual reporting requirement, reporting companies must file an initial BOI report and then file updated or corrected BOI reports as needed. Some quick examples that would require an updated filing are:

• Your company registers a new alternate name/DBA with the State

• Any change to a beneficial owner’s name, address, or unique identifying number (driver license or passport) provided in a BOI report.

Thank you for taking the time to read our Beneficial Ownership Information series. We hope you found it informative. If we can be of any assistance in helping your company file its initial report or answer any BOI reporting questions, please do not hesitate to reach out.

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The information in this blog is provided solely for informational purposes. The information provided is not intended to create an attorney-client relationship and shall not be construed as legal advice on any specific matter. Each legal matter is unique and requires an analysis based on the particular circumstances. As a result, the information provided here may not be applicable in every situation, including your situation, and action should not be taken based on this information without seeking specific legal advice based on particular circumstances. Results may vary depending on your particular facts and legal circumstance.