The Chronicles Of Grant County
New Federal Regulatory Requirements
Affecting Businesses In Southwest New Mexico
Part One
Andrea Gacki is the Director of the Financial Crimes Enforcement Network. (The photograph was provided courtesy of the United States Department of the Treasury, September 17, 2018.)
A deadline – January 1, 2025 – is fast approaching for many businesses in southwest New Mexico as well as the rest of the country.
Many people owning businesses are faced with a new regulatory requirement of the Federal government. Unless exempted (more on that below), most small businesses have to file reports on their owners with a division of the United States Department of the Treasury.
These new regulations are the result of the Corporate Transparency Act (CTA) that was enacted by the Federal government in 2021.
As part of CTA, unless exempted, Beneficial Ownership Information (BOI) reports need to be filed by corporations, limited liability companies (LLCs), and any other entities created by the filing of a document with a secretary of state or any similar office in the U S as well as entities created under the laws of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
Those entities required to report are called “reporting companies.”
These new regulations are being implemented through the Financial Crimes Enforcement Network (FinCEN), a division of the U S Department of the Treasury.
BOI reports will provide the Federal government with detailed information about each reporting company as well as the individuals that own and/or control each reporting company. Those individuals are called “beneficial owners.”
A beneficial owner, according to the FinCEN, is an individual who either directly or indirectly exercises substantial control over the reporting company or an individual who owns or controls at least 25% of the reporting company’s ownership interests.
The FinCEN has specific definitions of what “substantial control” means.
Certain individuals with specific titles as well as key officials who have the ability to make management, financial, and operational decisions are among those that the FinCEN considers to have “substantial control” of reporting companies.
Not every business will be required to file a BOI report.
The FinCEN indicated that there are 23 types of entities that are exempt from the reporting requirements. A detailed list of all of the entities exempted from filing BOI reports is available on the FinCEN website,
In addition to those specific entities exempted, if a business is operated as a sole proprietorship, it may also not have to file a BOI report with the FinCEN. The Federal agency detailed that a BOI filing would be required if the sole proprietorship was created or registered to do business by filing a document with a secretary of state or similar office, but if no such filing occurred, no BOI report would need to be filed.
A statement from the FinCEN specifically noted that “filing a document with a government agency to obtain (1) an IRS employer identification number, (2) a fictitious business name, or (3) a professional or occupational license does not create a new entity, and therefore does not make a sole proprietorship filing such a document a reporting company.”
All BOI filings need to be done electronically through the website of the FinCEN.
Among the information required to be filed about each beneficial owner are the person’s name, date of birth, and street address. In addition, an identification document of each beneficial owner must be uploaded to the BOI filing system.
Only specific types of identification documents are considered acceptable to meet the requirements of the FinCEN.
Detailed information about the reporting companies is also required to be filed with the FinCEN, including such items as the official name of the reporting company, any names that it may use in doing business, and its address. Newly-created companies are required to also provide information about any individuals who formed the new companies.
There is no fee for filing the BOI report with the FinCEN.
Reporting companies that existed prior to December 31, 2023, or were registered to do business before that date have to file the required BOI report to the FinCEN no later than January 1, 2025.
For reporting companies created or registered to do business during 2024, those entities have (or have had) 90 calendar days to file their BOI reports after receiving actual or public notice that their company’s creation or registration is effective, whichever is earlier.
While filing a BOI report is not an annual requirement, reporting companies do have to file BOI reports as any information needs to be updated or corrected. Those updated BOI reports must be filed within 30 days of any change.
There are, officially, serious consequences for not filing BOI reports with the FinCEN.
Individuals and reporting companies required to file, but that don’t do so face several potential sanctions. These include civil penalties of up to $500 for each day that the violation continues as well as criminal penalties of up to two years imprisonment and fines of up to $10,000.
The information filed with the FinCEN will be available to a variety of governmental and financial entities in the U S and beyond.
According to a fact sheet from the Federal government, information from the FinCEN can be utilized, for “…both criminal and civil investigations and actions, such as actions to impose civil penalties, civil forfeiture actions, and civil enforcement through administrative proceedings.”
The FinCEN has a 57-page “Small Entity Compliance Guide” available detailing filing requirements for Beneficial Ownership Information. You can view this guide at
https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf .
Additional details on filing requirements, exemptions, and other relevant items for BOI reporting are also available on that website.
Businesses may want to contact an attorney or another professional of your choice to determine whether you may be exempt from filing a BOI report with the FinCEN or if you are required to make such a filing before the end of this year.
Part Two of this series will detail additional information about these new Federal regulations, including information on how a Federal judge ruled the regulations unconstitutional. The Federal government has appealed that ruling. Part Three will detail the role of Senator Marco Rubio in making these new regulations law. Senator Rubio has been nominated by President Donald Trump to be United States Secretary of State in the new Administration.
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