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Beneficial Ownership Unveiled: FinCEN's Newest Directive Deciphered

In its continued efforts against tax evasion, the Financial Crimes Enforcement Network (FinCEN) has introduced new rules regarding ownership disclosure for U.S. entities. Seasoned expats and digital nomads will recognize the FinCEN stamp from their regular FBAR submissions alongside their tax returns, especially those reporting foreign bank accounts.

Rule Summary: FinCEN now mandates companies to disclose beneficial ownership details through the

Beneficial Ownership Information (BOI) Report. One might wonder why the IRS and FinCEN, both under the Treasury's purview, aren't simply consolidating and sharing this information.

Who Should Report:

  • Domestic Entities: This includes U.S. corporations, limited liability companies (LLCs), partnerships and other entities established by the filing of formation documents with a state or similar authority as per state or Indian tribal laws.

  • Foreign Reporting Companies: Companies formed in accordance with foreign country laws but treated as a corporation or LLC for U.S. tax objectives and registered to conduct business in any state or tribal jurisdiction.

FinCEN Beneficial Ownership

Definition of Beneficial Owner: This refers to an individual who:

  • Directly or indirectly has significant control over a reporting entity.

  • Holds or controls at least 25% of the entity's ownership interests. Substantial control usually means the ability to make major decisions for the entity.

Information Reported:

Companies must provide the following information about beneficial owners:

  • Name

  • Birthdate

  • Address

  • A unique ID, accompanied by a photo (and not that flattering selfie from last summer).

Report Submission Deadlines: Entities established or registered before January 1, 2024, have until January 1, 2025, to submit their initial reports. Those founded or registered after January 1, 2024, have 30 days following their notification to file their inaugural reports.

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