The new Beneficial Ownership Information (“BOI”) reporting requirement is an anti-money laundering initiative enacted through the Corporate Transparency Act (“CTA”), which mandates that BOI information is reported to the FinCEN, a bureau of the U.S. Department of Treasury. On September 30, 2022, the FinCEN issued the Final Rule, describing who must file the BOI report, what information must be reported, and when the BOI report is due. Note that the Final Rule, defines “State” as any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico and any other commonwealth, territory, or possession of the United States. 

 

In General - BOI Reporting Requirement

  • The CTA requires that every “Reporting Company” must file a BOI Report with FinCEN within certain time limits (specified below), providing certain basic information of the reporting company itself, of its “Beneficial Owners” and the “Company Applicants” of the entity. 
  • For purposes of the BOI reporting provisions of the CTA, Puerto Rico is included under the definition of “State”. Therefore, the BOI reporting requirements will apply to certain entities of Puerto Rico as described below. 

 

  • When this report is due?
    • FinCEN will begin accepting the BOI reports on January 1, 2024. No need to report BOI until that date. 
    • A Reporting Company created or registered to do business before January 1, 2024, will have to until January 1, 2025 to file the initial BOI report. 
    • A Reporting Company created or registered on or after January 1, 2024, will have 30 days to file the initial BOI report. 

Reporting Company 

  • The Reporting Companies required to file the BOI Report can be domestic or foreign entities. 
    • A domestic Reporting Company means any legal entity that is a corporation, limited liability company, or any other entity created by filing a document with the secretary of state or any similar office created under State law.  
    • A foreign Reporting Company is a corporation, limited liability company, or other entity created under the law of a foreign country and is registered to do business in any State by the filing of a document with the secretary of state or any similar office created under State law.
  • Since Puerto Rico is included under the definition of “State”, legal entities registered with the Puerto Rico Department of State must also file the BOI Report, unless an exception applies. 
  • Exempted entities: There are 23 types of entities/activities that are exempt from the BOI reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies. 

 

Beneficial Owners

  • A Beneficial Owner is an individual (natural person) who, directly or indirectly, (1) exercises substantial control over the Reporting Company, or (2) owns or controls at least 25% of the reporting company’s ownership interests. 

Company Applicants

  • A Company Applicant can only be two persons: (1) the individual who directly files the document that creates or registers the company; and (2) if more than one person is involved, the individual who is primarily responsible for directing or controlling the filling. 

Information required in BOI Report

  • A Reporting Company will have to report: its full legal name, any trade names or dbas, complete current address of its principal place of business, its jurisdiction of formation (state or foreign), the Employer Identification Number (EIN), the Taxpayer Identification Number (TIN) or the foreign identification number (if it does not have a TIN). 
  • For the Beneficial Owner, the Reporting Company will have to provide their full legal name, date of birth, current residential address, and a unique identification number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document (and an image of such document). 
  • For the Company Applicant, the Reporting Company will have to provide the same information as the Beneficial Owner. If the Company Applicant is an attorney or a corporate formation agent, it must report the Company Applicant’s business address. 

Commencing on January 1, 2024, Puerto Rico entities registered with the Puerto Rico Department of State will be subject to the BOI reporting requirements discussed. Accordingly, Puerto Rico entities should review these rules and determine an action plan to ensure compliance with the new rules. 

At RSM Puerto Rico, we can provide you with additional information and advice regarding these matters. Please contact our tax advisors at (787) 751-6164 | [email protected] for help or more information.