BOI reporting for internet-based companies

Understanding Beneficial Ownership Information (BOI) Reporting for U.S. Internet-Based Companies and LLC Founders.

The landscape of Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA) has seen significant changes, particularly impacting U.S. internet-based companies and LLC founders.

As of FinCEN’s interim final rule published on March 26, 2025, a crucial update has redefined who needs to report. Current Scope of BOI Reporting: What U.S.

Businesses Need to Know. A key development is that U.S.-formed entities, previously referred to as 'domestic reporting companies,' and U.S. persons are now exempt from BOI reporting requirements to FinCEN.

This means if your internet business is an LLC or corporation formed under U.S. state law, it is currently exempt from these federal reporting obligations. The revised definition of a 'reporting company' now exclusively applies to entities formed under the law of a foreign country that have registered to do business in any U.S.

State or Tribal jurisdiction by filing with a secretary of state or similar office. Which Entities Still Must Report?

Only foreign entities that have registered to do business in the U.S. and do not qualify for other exemptions are considered reporting companies. These entities must file BOI reports with FinCEN according to the new deadlines.

Importantly, U.S. persons are not required to report BOI for these foreign reporting companies. Deadlines and Timing for Foreign Reporting Companies.

FinCEN’s interim final rule (IFR) establishes specific deadlines for foreign entities: Foreign entities registered to do business in the U.S. before March 26, 2025, must file their BOI reports by April 25, 2025.

Foreign entities registered on or after March 26, 2025, have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective. Previous deadlines for domestic entities are superseded by this IFR.

What Information is Required? Beneficial Ownership Information Reports (BOIRs) generally require information about the reporting company itself, and details about each beneficial owner.

A beneficial owner is an individual who either exercises substantial control over the company or owns or controls at least 25% of its ownership interests. In some cases, information about company applicants is also required.

Filings are conducted electronically through FinCEN’s secure BOI E-Filing system, and companies can obtain FinCEN identifiers. Reporting companies are also obligated to update or correct their reports as needed.

Penalties and Enforcement. The Corporate Transparency Act (CTA) and earlier FinCEN guidance outline potential civil penalties, such as up to $500 per day for ongoing violations, and criminal penalties, including up to two years imprisonment and/or a fine of up to $10,000, for willful failures to report or for submitting false information.

With the IFR, the enforcement focus now applies specifically to the entities that remain reporting companies, i.e., foreign reporting companies. State-Level Interactions and Practical Implications.

While FinCEN reporting is federal, state-level actions can still be relevant. State secretary-of-state filings do not create BOI obligations for U.S.-formed companies under the IFR.

However, if a foreign entity registers in a U.S. state, this action triggers its federal BOI reporting obligations and associated FinCEN deadlines. It's crucial to remember that state law continues to govern entity formation, annual reports, and registered agent requirements, so ongoing state compliance remains essential.

Practical Compliance Guidance for U.S. Internet-Based Business Owners and LLC Founders:

Understanding Beneficial Ownership Information (BOI) Reporting for U.S. Internet-Based Companies and LLC Founders.

The landscape of Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA) has seen significant changes, particularly impacting U.S. internet-based companies and LLC founders.

As of FinCEN’s interim final rule published on March 26, 2025, a crucial update has redefined who needs to report. Current Scope of BOI Reporting: What U.S.

Businesses Need to Know. A key development is that U.S.-formed entities, previously referred to as 'domestic reporting companies,' and U.S. persons are now exempt from BOI reporting requirements to FinCEN.

This means if your internet business is an LLC or corporation formed under U.S. state law, it is currently exempt from these federal reporting obligations. The revised definition of a 'reporting company' now exclusively applies to entities formed under the law of a foreign country that have registered to do business in any U.S.

State or Tribal jurisdiction by filing with a secretary of state or similar office. Which Entities Still Must Report?

Only foreign entities that have registered to do business in the U.S. and do not qualify for other exemptions are considered reporting companies. These entities must file BOI reports with FinCEN according to the new deadlines.

Importantly, U.S. persons are not required to report BOI for these foreign reporting companies. Deadlines and Timing for Foreign Reporting Companies.

FinCEN’s interim final rule (IFR) establishes specific deadlines for foreign entities: Foreign entities registered to do business in the U.S. before March 26, 2025, must file their BOI reports by April 25, 2025.

Foreign entities registered on or after March 26, 2025, have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective. Previous deadlines for domestic entities are superseded by this IFR.

What Information is Required? Beneficial Ownership Information Reports (BOIRs) generally require information about the reporting company itself, and details about each beneficial owner.

A beneficial owner is an individual who either exercises substantial control over the company or owns or controls at least 25% of its ownership interests. In some cases, information about company applicants is also required.

Filings are conducted electronically through FinCEN’s secure BOI E-Filing system, and companies can obtain FinCEN identifiers. Reporting companies are also obligated to update or correct their reports as needed.

Penalties and Enforcement. The Corporate Transparency Act (CTA) and earlier FinCEN guidance outline potential civil penalties, such as up to $500 per day for ongoing violations, and criminal penalties, including up to two years imprisonment and/or a fine of up to $10,000, for willful failures to report or for submitting false information.

With the IFR, the enforcement focus now applies specifically to the entities that remain reporting companies, i.e., foreign reporting companies. State-Level Interactions and Practical Implications.

While FinCEN reporting is federal, state-level actions can still be relevant. State secretary-of-state filings do not create BOI obligations for U.S.-formed companies under the IFR.

However, if a foreign entity registers in a U.S. state, this action triggers its federal BOI reporting obligations and associated FinCEN deadlines. It's crucial to remember that state law continues to govern entity formation, annual reports, and registered agent requirements, so ongoing state compliance remains essential.

Practical Compliance Guidance for U.S. Internet-Based Business Owners and LLC Founders:

Confirm Formation Status

Verify whether your entity was formed under U.S. state law (domestic) or foreign law. If domestic, you are currently exempt from FinCEN BOI reporting. If foreign and registered in a U.S. state, proceed with BOI reporting promptly.

Document Beneficial Ownership Internally

Even if exempt, maintaining internal records identifying owners and individuals with substantial control, along with copies of identity documents, is a best practice for good corporate governance and may be required by banks or other counterparties.

Monitor Changes to Law and FinCEN Guidance

The BOI/CTA regulatory environment is dynamic. Stay informed about FinCEN and Treasury announcements, as rules and enforcement priorities can evolve.

Establish Procedures for Updates and Corrections (for Foreign Reporting Companies)

If your company is a foreign reporting company, implement internal triggers for filing updated BOIRs when there are changes in ownership, control, corporate structure, or registration status, ensuring compliance within required timelines.

Seek Professional Guidance

If you are uncertain about your reporting obligations or need assistance with filings, consider consulting knowledgeable legal counsel or a compliance provider to ensure accuracy and safeguard sensitive information. By staying informed and proactive, U.S. internet-based businesses and LLC founders can navigate the evolving BOI reporting requirements effectively.