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Tiered Ownership Structures in BOI Reporting: An Introduction
Did you know that strategically filing Beneficial Ownership Information Reports (BOIRs) in a certain sequence can save time and reduce the need for redundant inputs? In situations where entities are organized across multiple levels of ownership, it becomes crucial to carefully strategize. Even though different professionals might manage these entities, a comprehensive approach to understanding the ownership structures can make a difference. If all involved professionals consider every beneficial owner holding at least a 25% ownership interest and work together, the reporting process can be made more streamlined and effective.
Tiered Ownership Structures in BOI Reporting: A Helpful Tool
One tool that can be harnessed by professionals to save time, is the final rule issued on November 8, 2023 that specifies when and how entities required to file a BOIR may use the FinCEN Identifiers (FinCEN IDs) of certain related entities in the beneficial owners section of their report, rather than details about the individuals. The criteria that need to be met in order to be able to utilize this includes:
- The other entity has obtained a FinCEN identifier and provided that FinCEN identifier to the reporting company;
- An individual is or may be a beneficial owner of the reporting company by virtue of an interest in the reporting company that the individual holds through an ownership interest in the other entity; and
- The beneficial owners of the other entity and of the reporting company are the same individuals.
It’s important to emphasize here that upon analyzing entity tiers this allowance is accepted in relation to ownership interest and does not require that beneficial owners with substantial control be the same across the tiers. Watch our recent video for further discussion about tiered ownership structures in BOI reporting.
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