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Considering the recent changes in the report requirements under BOI, FinCEN recently issued guidance regarding its expectations of how "ceasing entities," or inactive entities, should meet their reporting requirements. We are here to help provide additional clarity on whether, when, and how ceasing entities must file or update their BOI with FinCEN:.
A "ceasing entity" is any type of business or legal entity which is inactive or in dissolution. Typically, ceasing entities must maintain BOI up to date with FinCEN; however, under certain conditions, exceptions exist, for example, registration state, reason for not being active, and is the entity in dissolution.
If the beneficial ownership of a ceasing entity has changed, then it may be obliged to file an update even though it is no longer obliged to file a continuing report. Whether the entity is obliged to will depend on when the change to its beneficial ownership occurred in relation to when the entity was reported to have ceased. The FinCEN rules also include deadlines for reporting changes in such beneficial ownership, meaning that updates must be submitted within 30 days after the date of a change in most cases.
An entirely dissolved or irrevocably inactive must make a closing BOI report with FinCEN. Such an end BOI report would then carry the ultimate ownership of that entity; some sort of statement related to the ending, and the remainder would likely be proof related to that entity actually being dissolved. The closing would simply be a terminating document for closing purposes-only, making sure that it doesn't get on those FinCEN records it was given without the true inactivation status.
Yes, the inactive companies do attract the penalties not towards BOI reporting requirements adherence. In fact, the FinCEN can be viewed at imposing penalties towards the dissolving companies due to misses in deadlines along with an accuracy of BOI reports submitted. In spite of being at a dissolution phase, an inactive entity too would have to comply; fines and even legal persecution would simply add to the mess.
Inactive entities and entities under dissolution must keep adequate and proper records, especially those changes of beneficial owners to the extent that a Final BOI is filed. From time to time monitoring of FinCEN rules and discussion with compliance people, inactive entities may well be assured that all the reporting mandates under BOI do not break their continuity.
It would be a little difficult to get through the requirements of reporting in FinCEN, which may include ceasing and inactive entities. Nevertheless, staying updated on the current changes and filing correct BOI reports will help them evade possible penalties and stay on the right track.
