Beneficial Ownership Information Reports: What You Need to Know  

Alison C. Trianfo, Fraternal Law Partners, ali.trianfo@compliancemb.com

A new federal reporting requirement rolled out with the new year. Effective January 1, 2024, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) will now collect “beneficial ownership information” (BOI) about the individuals who own or control an entity.

The new requirement stems from the 2021 bipartisan Corporate Transparency Act, passed with the intent of identifying “bad actors who exploit anonymous shell companies to engage in money laundering, corruption…and a host of other criminal offenses with impunity.”^[1]

The good news for fraternal organizations is that tax-exempt entities are also exempt from these BOI reporting requirements. National fraternal organizations, collegiate chapters, house corporations, alumni associations, and educational foundations are generally organized as 501(c)(2), (c)(3), and (c)(7) organizations and exempt from federal taxation.

Unfortunately for many small organizations, especially collegiate chapters, tax exemption can be revoked by the Internal Revenue Service (IRS), most commonly for failure to file a federal tax return. If an organization’s tax-exempt status is revoked by the IRS for more than 180 days, it also loses its exemption from BOI reporting requirements. Entities that are no longer exempt must file a BOI report and disclose senior officers with “substantial control” over the organization. A pending Form 1023 or 1024 for recognition of exemption is not sufficient to avoid BOI reporting requirements.

Whether or not your organization must file a BOI report – and whose information is required to be reported – is a serious question for a company’s ownership team, board, or other accounting professional. While financial information does not need to be reported on a BOI report, personal information like dates of birth, home addresses, and passport or driver’s license numbers and images must be submitted for each owner or incorporator. However, social security numbers are not required to be reported. DO NOT release your SSN to any business or individual filing a report on you or your company’s behalf.

Fraternal Law Partners and Manley Burke Compliance, LLC have compiled an FAQ of some of the most common BOI-related questions, which follows this article.

For more on beneficial ownership information, visit https://www.fincen.gov/.

Beneficial Ownership Information: Fraternal Organization FAQ

We always file our tax return on time. Does this satisfy the BOI report requirement?

No. BOI reports are independent of IRS federal tax returns and have a separate filing requirement.

We recently filed our annual business report with the Secretary of State where we are organized or headquartered. Does this satisfy the BOI report requirement?

No. Beneficial ownership information is a federal reporting requirement. No information provided to state or local regulators will satisfy the federal BOI reporting requirement. Do not confuse notices from the Secretary of State about these new federal requirements as the states’ own reporting obligation.

Does my organization need to file a report?

All entities should review BOI reporting requirements and consult with an accounting or legal professional whether a BOI report is required. There are twenty-three (23) types of businesses that are exempt from the reporting requirements.^[2] Tax-exempt entities fall under one of those exemption categories.

Organizations described in section 501(c) of the Code include, but are limited to, 501(c)(3) educational foundations at the national and local levels, 501(c)(2) title holding companies owning and collecting rent on fraternity houses, and 501(c)(7) fraternal chapters and alumni associations.

Great, my organization is exempt. Do I need to do anything to claim this BOI exemption?

No. Entities that are exempt from BOI reporting requirements do not need to apply for or claim the exemption.

Many of our fraternal chapters are unincorporated. Where do they stand?

Unincorporated entities are not reporting companies, and therefore not required to file a BOI report. Even if an unincorporated chapter files a federal tax return (which, they should!) the chapter does not need to file a BOI report.

I’m on the board of a nonprofit entity, but the organization’s tax-exempt status was revoked for failure to file a tax return. Does the organization need to file a BOI report now that the organization is no longer tax-exempt? If so, do directors or members of a previously exempt corporation need to be reported as beneficial owners?

Identify when the organization lost its exempt status. If the previously held exemption was revoked less than 180 days ago, then the organization still meets the BOI exemption eligibility criteria.

However, if the tax-exempt status was revoked more than 180 days ago, then the entity may be required to file a BOI report with information. The organization will have 30 days after it is no longer eligible for the exemption to file a BOI report. Although nonprofits have no “owners” claiming an ownership interest in the organization, certain officers and directors still have “substantial control” of the organization’s operations and therefore must be reported. All “senior officers”, including the President, Chief Executive Officer, Chief Financial Officer, or any other officer regardless of titled position should be included as beneficial owners.

What information is actually reported?

Each reporting company must file the following information about the entity itself:

• Full legal name of the entity;
• All trade names or “doing business as” names;
• Principal place of business address. This must be a physical address, not a PO Box;
• State of formation (or tribal or foreign jurisdiction);
• [Non-U.S. companies only] State or tribal jurisdiction of first U.S. registration; and
• Taxpayer identification number/employer identification number.

For example:

• Example, Inc.
• D/B/A: Examples Unlimited
• 123 Apple Street, Cincinnati, OH 45202
• Ohio
• EIN: 12-123457

After the identifying information for the company has been reported, the following information for each beneficial owner or company applicant must be reported:

• Full legal name;
• Date of birth;
• Current residential address (exception: business street address accepted for third-party company applicants); and
• Unique identifying number, jurisdiction, and image of one of the following: U.S. passport, state driver’s license, identification document issued by a government entity, or foreign passport.

Beneficial owner example:

• Beneficial Owner: Jane Doe Smith
• 01/01/1985
• 12 Home Lane, Cincinnati, OH 45202
• Passport #1234567, United States (image attached)

Company applicant example:

• Company Applicant: Jonathan Robert Smith, Direct Filer
• 01/02/1985
• 123 Business Street, Cincinnati, OH 45202
• Ohio driver’s license #TT012345 (image attached)

Note that beneficial owners do NOT have to report the amount of his or her ownership share, although any person with more than a 25% ownership interest must be reported.

Are BOI reports public record?

Only to certain government officials in certain circumstances. Unlike other IRS 990 records or certain Secretary of State business filings, there will not be a publicly searchable database of beneficial ownership information for reporting companies.

Beneficial ownership information will be stored on a secure, non-public database and may only be accessed by federal, state, local, or Tribal officials for “authorized activities related to national security, intelligence, and law enforcement.” Note that foreign officials may also request BOI report information upon written request to a U.S. federal agency.

Companies who submit a BOI report can also consent to share their information with a financial institution. If a company consents to sharing its BOI report with a financial institution, it also allows any body regulating that financial institution access to its BOI report.

What is the cost to file?

There is no filing fee assessed by the U.S Department of Treasury or FinCEN to file a BOI report. Be wary of third-party mailings that proport to be from a government entity requesting a filing fee.

When do I need to file, and how often must I renew?

Entities created or registered to do business before January 1, 2024, will have until January 1, 2025, to file their initial BOI report. If an entity was formed during calendar 2024, it must file its initial BOI report within ninety (90) days of the date the entity received actual notice that its registration was effective, or upon public notice of a secretary of state filing approval, whichever is earlier. Starting January 1, 2025, new entity initial BOI reports are due within thirty (30) days.

Entities do not need to file BOI reports on an annual basis. BOI reports should be submitted with updated or corrected information as necessary, which means that some companies may need to submit an updated BOI report more than others.

What is the penalty for failure to file?

The willful failure to file or update a BOI report carries the potential of a civil fine of up to $500 per day, or criminal penalties including imprisonment for up to two years and/or a fine of $10,000. Senior officers of an entity will be held responsible for the failure to file, so be cautious of how initial filing and update responsibilities are delegated.

Persons who willfully withhold information or provide intentionally incorrect information may be held civilly or criminally liable for the failure to accurately and timely file as well.

[1] FinCen Issues Final Rule Regarding Access to Beneficial Ownership Information, Financial Crimes Enforcement Network (Dec. 21, 2023).

[2] 31 CFR § 1010.380(c)(2).