IRS BOI (Beneficial Ownership Information) Requirement
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A IRS BOI (Beneficial Ownership Information) Requirement is a IRS regulatory requirement that requires IRS-deemed entities to disclose the identities of their beneficial owners.
- Context:
- It can (typically) apply to entities like corporations, LLCs, and limited partnerships, requiring them to disclose beneficial ownership details for compliance purposes.
- It can (often) assist in identifying individuals who may attempt to evade taxes or engage in money laundering and other financial crimes by hiding behind corporate structures.
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- It can vary in reporting requirements, with ownership thresholds such as 25% or more, depending on the specific regulations set by the IRS and other regulatory bodies.
- It can require periodic updates to ensure that any changes in ownership or control are accurately reflected in the records maintained by the IRS.
- It can be cross-referenced with other data sources, such as FATCA (Foreign Account Tax Compliance Act) filings, to improve transparency and enforcement against financial crimes.
- It can impose significant penalties for non-compliance, ranging from fines to restrictions on business activities, reinforcing the importance of compliance in high-risk sectors.
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- Example(s):
- 2001: USA PATRIOT Act introduces initial beneficial ownership reporting requirements for financial institutions
- 2010: FATCA expands reporting requirements for foreign financial assets
- 2016: FinCEN Customer Due Diligence Rule requires financial institutions to identify and verify beneficial owners
- 2021: Corporate Transparency Act establishes current BOI reporting framework
- 2024: Mandatory BOI reporting begins for new and existing entities
- ...
- Counter-Example(s):
- IRS Form W-9, which collects taxpayer identification information but does not provide information on beneficial ownership.
- IRS Tax Return (1040), which reports individual income but does not capture ownership or control of other entities.
- See: FATCA (Foreign Account Tax Compliance Act), Anti-Money Laundering (AML), KYC (Know Your Customer), Beneficial Ownership.
References
2024
- https://www.irs.gov/individuals/international-taxpayers/beneficial-owners
- Withholding agents must withhold 30% from payments to foreign payees unless valid documentation establishes the payee's status as a U.S. person or an entitled foreign beneficial owner.
- Required documentation should confirm that intermediaries and beneficial owners comply with FATCA regulations.
- Documentation must be obtained before payment, and it is invalid if known to be incorrect or unreliable.
- If reliable documentation is unavailable, agents must apply presumption rules for withholding.
- Payments to joint owners require documentation from each owner to verify withholding exemptions.
- Form W-9 identifies a U.S. person payee and includes a Taxpayer Identification Number (TIN); it exempts payees from NRA withholding but may require Form 1099 reporting.
- Foreign beneficial owners should provide Form W-8 to confirm their status; various W-8 forms exist based on specific circumstances.
- Forms W-8 BEN, BEN-E, ECI, EXP, and IMY are used for different types of foreign beneficial owners to certify withholding eligibility.
- Other forms, such as Form W-4 or Form 8233, may be necessary for exemptions on personal services compensation for nonresident aliens.
- FinCEN requires corporations, LLCs, and certain entities to report beneficial ownership information beginning January 1, 2024, as part of BOI reporting requirements.
- FinCEN’s BOI resources include FAQs, filing infographics, and informational videos; contact FinCEN for BOI inquiries, not the IRS.