Update to BOI Reporting Requirement
On July 8, 2024, the Financial Crimes Enforcement Network (“FinCEN”) released an interpretive update to the beneficial ownership information (“BOI”) reporting requirement applying to legal entities that have been dissolved or otherwise ceased to exist after January 1, 2024. Some view this update as expanding the reporting requirement, while others view this interpretation as a clarification on the prior FAQs relating to dissolved or inactive entities.
Prior to the new guidance, FinCEN FAQs stated that the BOI requirements applied to entities that qualified as inactive entities for reporting purposes if they were formed prior to January 1, 2020. This guidance was not enough to provide clarity on whether a dissolved entity would be required to report, instead providing ambiguity to those businesses that were formed prior to January 1, 2020, but dissolving prior to January 1, 2024.
FinCEN’s interpretive guidance states that any reporting company that was not “formally and irrevocably” dissolved prior to January 1, 2024, must file a BOI report within the deadlines set forth in the requirements. This requirement includes business that may have ceased conducting business, hold zero assets, or be administratively dissolved. For a company to be considered non-existent, it must have “formally and irrevocably” dissolved, which typically involves filing dissolution paperwork, receiving confirmation of dissolution, paying related taxes or fees, ceasing business operations, and liquidating assets. Administrative dissolution or suspension is not enough for an entity to be considered “ceasing to exist” as a legal entity unless it becomes permanent.
Still unsure if your business is required to report?
Colorado Law Group is here to answer any questions you have regarding your business, and any reporting requirements. Colorado Law Group has become your one stop shop for all business-related legal questions, and our Business Compliance Solutions program specializes in your state and federal reporting requirements. Please call today for a consultation with one of our experienced business attorneys.
