Do I Need a BOI for My LLC? Plus 12 More Answers to BOI Questions

Yes, you must file a BOI report for every active LLC you own. It makes no difference how many properties the LLC owns. The only exception is if the LLC has more than 20 full-time employees and reported more than $5 million in U.S.-sourced income on its prior-year tax return—these are FinCEN-defined “large operating companies” that are not required to file a BOI report.

Yes, assuming none of the rentals are large operating companies.

At Ken-Mar Tax we urge you to file the BOI report. We understand that CPAs and other tax professionals who are not lawyers are allowed to interpret the tax law on behalf of their clients to help with IRS compliance without running afoul of unauthorized practice of law rules.

But the Corporate Transparency Act is not part of the tax law and is not enforced by the IRS. Therefore, filing a BOI report could constitute the unauthorized practice of law by CPAs and other non-lawyers. The unauthorized practice of law is a crime—an activity not covered by CPA liability insurance policies.

What constitutes the unauthorized practice of law is governed by state law and varies by jurisdiction. State bar associations are just beginning to grapple with the question of whether filing BOI reports on behalf of clients constitutes the practice of law. There are as yet no clear answers. Read an earlier article BOI Reporting Deemed Unconstitutional for Some.

Arguably, simply filling out a BOI report form using information supplied by the client is not the practice of law. On the other hand, determining if a person is a beneficial owner or if an exemption applies could require interpreting the CTA’s complex legal rules (as well as business organization documents), which is the domain of licensed attorneys.

At least one CPA malpractice insurance company (CAMICO) has advised its policyholders that it believes CPAs who assist clients with BOI filings would engage in the practice of law without a license in many states. It recommends that CPAs not provide this service.

At Ken-Mar Tax we are not providing this service and again, urge you to file your own BOI report. For other tax professionals we suggest that before taking on this work, CPAs, enrolled agents (EAs), and other non-lawyer tax practitioners should contact their malpractice insurer to see if the activity is covered by their policy.

The penalties for willfully violating the BOI reporting requirements include

• civil penalties of up to $500 per day that a violation is not remedied,
• a criminal fine of up to $10,000, and/or
• imprisonment of up to two years.

There is no limit on the number of people that can be subject to these penalties. Both individuals and corporate entities can be held liable for willful violations of the BOI filing rules. This can include

• any person who willfully files a false or fraudulent BOI report on a company’s behalf;
• any person who willfully provides the filer of a BOI report with false information to report; and
• beneficial owners who willfully fail to file a BOI report or file a false report—this can include a corporation’s officers, directors, and certain of its employees—and an LLC’s members and certain of its employees.

Self-employed individuals who have not formed an LLC or a corporation for their business do not come within the definition of a reporting company and they do not have to file a BOI. This is so even if they use a fictitious business name (“dba”) or trade name to identify their business, have obtained a business license, or have an employer identification number (EIN).

Only business entities that are formed by filing a document with the secretary of state or similar official are reporting companies that must file a BOI. Almost no general partnerships are formed this way, so few general partnerships have to file a BOI report.

Some limited partnerships are formed by filing a document with a secretary of state. These are reporting companies that must file a BOI.

But the individual partners in a limited partnership do not have to file a BOI themselves. The limited partnership must file a single BOI listing all partners with a 25 percent or more ownership interest. The only exception is if the partnership has more than 20 full-time employees and reported more than $5 million in U.S.-sourced income on its prior-year tax return.

The BOI must contain the current street address of the reporting company’s principal place of business—for example, the company’s headquarters. You cannot list a P.O. box, an attorney or registered agent address, or an in-care-of address.

Not exactly. There is an exemption from BOI reporting for public accounting firms that have registered with the Public Company Accounting Oversight Board (PCAOB) under Section 102 of the Sarbanes-Oxley Act of 2002.7 This enables such firms to audit public companies and broker-dealers. Only about 1,600 of the 46,000 public accounting firms in the U.S. have so registered.

But accounting firms could also be exempt from BOI filing if they are “large reporting companies,” which are defined as those that have more than 20 full-time employees and reported more than $5 million in U.S.-sourced income on their prior year tax returns.

No, though some may offer to do so as part of their service.  The role of CPAs, EAs, and other non-lawyers in filing BOI reports is under scrutiny, with concerns about the unauthorized practice of law. At Ken-Mar Tax we do not file BOI reports for our clients but can refer them to business attorneys that can help in this area.

You don’t need to list your Social Security number or ITIN in the BOI report. Instead, each beneficial owner must provide the unique identifying number and image from any one of the following documents:

• U.S. passport
• State driver’s license
• Identification number issued by a state or local government or a tribe
• Or, if an individual does not have any of the previous documents, a foreign passport

For reporting companies created January 1, 2024, or after, the “company applicant” must be identified in the BOI report along with a business address, date of birth, and identification number.

There can be up to two applicants. The first applicant is always the individual who electronically or physically filed the articles of incorporation for your corporation with the secretary of state. There can also be a second applicant: the individual primarily responsible for directing or controlling the filing of the articles.

If your attorney personally filed the articles, or directed the filing of the articles by another person, such as a paralegal in the attorney’s law firm, he or she should be listed as a company applicant. The paralegal would also be a company applicant.

If the attorney prepared the articles but played no role in their filing, the attorney is not a company applicant.

Yes, the BOI report must be kept up to date. If there is a change in the company’s beneficial owners, the company must file an updated BOI report no later than 30 days after the date on which the change occurred.

No, not if he or she is still a minor. You can list yourself as the beneficial owner instead. But when your child becomes an adult, your company must file an updated BOI report listing him or her as a beneficial owner.

The fact that your child’s shares have no voting rights has no impact on whether he or she is a beneficial owner for BOI report purposes.

For the same reason non-criminals file them: to avoid the civil and criminal penalties for not filing.

It is likely that many criminals will not comply with the CTA, just as they fail to comply with many other laws. But here’s the catch: it’s not difficult for FinCEN to match corporate, LLC, and similar filings with a secretary of state and those in the BOSS database.

Fact. Almost all industrialized nations already require that BOI reports be filed by businesses, and those nations have found them helpful in combating money laundering and other criminal activity. The United States is literally the last major country to require centralized BOI filing.