Today’s world of entities and organizations makes it difficult to discern who owns what. Sometimes, hiding the identities of the owners of entities is a goal, as was the case with a recent lottery winner in Florida who claimed the lottery proceeds through an LLC. Other times, the identities of owners of entities, although not intended to be confidential or secret, can be hard to determine.
Our government has significant interest in knowing who is who when it comes to business entities like LLCs and corporations, because entities can be misused in creating “shell games” to avoid taxes or to commit crimes, especially cybercrimes.
A couple decades ago, publicly traded corporations faced new ownership disclosure rules when filing lawsuits in federal court. Those required disclosures were primarily designed to ensure that a judge who may own shares of one company’s stock can know whether the judge has a conflict of interest due to that company owning shares in another corporation, and so forth.
About the same time, the IRS stopped allowing people to get employer/tax identification numbers (EINs) for businesses and trusts without having the entity for which the number was requested disclosing “a responsible party” who already had a social security number or EIN.
The 2014 Farm Bill introduced even more requests for information concerning the ownership of trusts and entities in order to ensure that no one, individual person exceeded the annual Farm Service Agency payment limitation (usually $125,000).
Now, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has created a mandatory reporting requirement for most entities that are established/organized with the Ohio Secretary of State.
The new FinCEN Beneficial Ownership Information Report can be filed online, and does not necessarily require an attorney’s assistance, but legal help nevertheless can help immensely. Almost every entity that is established/organized with the Ohio Secretary of State has 90 days after organization with the Secretary of State to file the FinCEN report, which will collect various aspects of information, including the identities of everyone who (a) owns at least 25% of the entity and/or (b) “substantially controls” the entity.
For entities organized in 2025 and after, the FinCEN report will be due within 30 days of the entity’s organization with the Ohio Secretary of State.
Active entities organized prior to 2024 are NOT grandfathered in. However, those earlier-established entities will have until December 31, 2024 to file their respective FinCEN report.
There are also FinCEN reporting requirements for some entities that may not be officially organized through the Ohio Secretary of State, like some partnerships.
Of course, of the entities that would be expected to file FinCEN reports, there are exceptions (entities expressly excluded from the defined list of required filers) and exemptions (entities that are defined as entities that are required to file, but which are specifically excluded).
To know whether your existing or new entity needs to file a FinCEN report and to file the FinCEN report if required, it is advisable to contact your attorney or visit FinCEN’s official website: fincen.gov/boi.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.
