BOI compliance post-filing follow-up

Navigating BOI Compliance: Post-Filing Follow-Up for U.S. Business Owners and LLC Founders

The Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements have introduced significant changes for businesses. While initial filings have been a primary focus, understanding post-filing obligations is crucial for ongoing compliance. This guide provides U.S. business owners and LLC founders with essential information on updating BOI reports, correcting inaccuracies, potential penalties, and state-level considerations, especially in light of recent FinCEN rule changes.

Key Federal BOI Requirements and Recent Changes:

FinCEN issued an interim final rule on March 26, 2025, significantly altering the scope of BOI reporting. This rule now exempts most U.S.-created entities, previously known as "domestic reporting companies," from the BOI reporting requirement. The focus has shifted to certain foreign entities formed under the law of a foreign country and registered to do business in a U.S. state or tribal jurisdiction.

• Who Must File Now? Primarily foreign reporting companies registered to do business in the U.S.
• Deadlines for Foreign Entities:
  • Registered before March 26, 2025: File BOI by April 25, 2025.
  • Registered on or after March 26, 2025: File initial BOI within 30 calendar days after registration is effective.
• Important Note: Older guidance referencing deadlines for domestic entities (e.g., January 1, 2025, for entities created before 2024) has been superseded for U.S. entities by this March 26, 2025, interim final rule. Always refer to current FinCEN announcements.

Post-Filing Obligations: Updates and Corrections:

For entities that are required to file, ongoing vigilance is key.

• Updating Information: Any change to the required information about a reporting company or its beneficial owners must be reported to FinCEN by filing an updated BOI report. This update must be submitted no later than 30 days after the date of the change. This includes changes to company data, ownership, a beneficial owner's name, address, or identification, and conversions that alter jurisdiction or legal name.
• Correcting Inaccuracies: If an inaccuracy is discovered in a previously filed BOI report, the company must correct it within 30 days of becoming aware of the inaccuracy or having reason to know of it.
• Safe Harbor Provision: There is a limited safe harbor for voluntary corrections. If a mistake or omission is corrected within 90 calendar days of the original report's deadline, penalties may be avoided.
• Filing Method: Updated BOI reports should be filed electronically through the BOI E-Filing system. FinCEN IDs can be used to streamline repeated reporting for individuals or entities.

Enforcement and Penalties:

Willful failure to report, update, or correct required BOI can lead to severe consequences. Civil penalties can reach up to $500 per day the violation continues. Criminal penalties may include imprisonment for up to two years and/or fines up to $10,000. The safe harbor for timely correction is a critical mechanism to avoid these penalties.

State-Level Considerations:

While BOI reporting is a federal requirement, states play a role in directing businesses and some are exploring their own transparency laws.

• State Referral to FinCEN: Most state filing offices, such as the Delaware Division of Corporations and the California Secretary of State, direct businesses to the FinCEN website for federal BOI obligations, as they do not administer BOI reporting themselves.
• Emerging State Laws: Some states are considering or have proposed their own beneficial ownership or transparency laws. For example, California's Legislature considered SB 1201, which, if approved, would require domestic and foreign corporations and LLCs doing business in California to publicly disclose beneficial ownership information starting January 1, 2026. These state-level proposals can differ significantly from federal BOI requirements in terms of frequency, public access, scope, and enforcement, necessitating careful monitoring.

Practical Compliance Checklist for U.S. Business Owners and LLC Founders:

1. Verify Reporting Status: Confirm whether your entity is currently a reporting company under FinCEN's latest rule, distinguishing between domestic and foreign reporting company status after March 26, 2025.
2. Retain Filing Evidence: If an initial BOI report was required and filed, ensure you have retained confirmation of submission (e.g., BOI E-Filing confirmation, FinCEN ID if used).
3. Establish Change Detection Processes: Implement procedures for identifying changes. Maintain an ownership register and require owners and senior officers to notify the company within a set timeframe (e.g., 10-14 days) of personal data changes. This allows the company to meet the 30-day FinCEN update deadline.
4. Calendar Deadlines: Mark the 30-day update/correction window on your calendar and assign a responsible compliance owner (e.g., corporate secretary, CFO, or external counsel/registered agent).
5. Securely Store Documents: Keep scans of required identification documents (driver's license, passport) in a secure system, noting expiration and renewal dates.
6. Coordinate with Third Parties: If using a third-party service provider, ensure timely communication to facilitate updates within the 30-day window.
7. Monitor for Changes: Regularly check FinCEN BOI announcements and relevant state Secretary of State websites for regulatory changes. Consult legal counsel for complex ownership structures or cross-border/foreign ownership.
8. Utilize FinCEN ID: Leverage the FinCEN ID system to reduce repetitive personal identifiable information (PII) uploads, ensuring access credentials are kept secure.

Caveat and Recommendation:

The BOI/CTA landscape is dynamic, with ongoing regulatory adjustments and potential litigation. The March 26, 2025, interim final rule significantly altered which entities must report. Therefore, business owners should:

• Verify Status: Always confirm their entity's reporting status on FinCEN's official web pages (FinCEN.gov/BOI and BOI FAQs).
• Document Decisions: Maintain thorough records of compliance decisions.
• Seek Counsel: Obtain prompt legal or compliance advice for any ambiguous situations, especially concerning foreign ownership, entity conversions, or evolving state-level reporting proposals.