Understanding FinCEN's Inactive Company Definition
The definition of an inactive company for the purposes of a Beneficial Ownership Information (BOI) filing with the Financial Crimes Enforcement Network (FinCEN) is quite specific. According to the Corporate Transparency Act (CTA) and FinCEN's regulations, an inactive entity must meet certain criteria to be exempt from reporting beneficial ownership information.
An "inactive entity" typically is defined by FinCen as a business entity that:
- Was in Existence on or Before January 1, 2020: The entity must have been created or registered to do business before this date.
- Has Not Engaged in Active Business Since: The entity has not engaged in any active business or commercial activity after January 1, 2020.
- Has No Assets: The entity does not hold any assets, including any assets of value or those that could generate income.
- Has Not Changed Ownership: The ownership structure of the entity has remained unchanged.
- Has Filed No Tax or Information Returns Since January 1, 2020: The entity has not filed any tax returns or other informational returns with the IRS since this date.
- Is Not Engaged in Any Business: The entity must not be engaged in any ongoing business operations or commercial activities.
These criteria must all be met for an entity to be considered inactive and exempt from the BOI reporting requirements. This exemption is meant to reduce the reporting burden on entities that no longer actively conduct business or have any assets or activities.
It is essential to ensure that all criteria are met, as failing to report when required or incorrectly claiming an exemption can lead to penalties. It is important to note that the definition of an inactive entity for BOI reporting is exclusive to FinCEN and does not apply to the classification of an inactive company by the Delaware Division of Corporations.
If a company is uncertain whether it qualifies as inactive for FinCEN's Beneficial Ownership Information (BOI) filing, it should seek guidance to ensure compliance. Here are steps to take to find the answers for your situation:
- Work with https://fincenreport.com/ to help determine if your company is eligible for a BOI exemption. They will offer a seamless platform for companies to file Beneficial Ownership Information (BOI) in compliance with the Corporate Transparency Act (CTA)
- Consult with Legal Counsel:
- Contact an attorney, as they can provide advice tailored to the specific circumstances of the company.
- Contact FinCEN:
- FinCEN provides resources and assistance for entities required to comply with BOI reporting. Companies can reach out directly to FinCEN for clarification on the requirements.
- FinCEN Contact Information:
- Phone: 1-800-767-2825
- Email: FRC@fincen.gov
- Web Inquiry https://www.fincen.gov/contact
- Review FinCEN Resources:
- FinCEN’s website https://www.fincen.gov/boi/small-business-resources offers guidance documents, FAQs, and other resources that can help clarify the requirements and exemptions under the Corporate Transparency Act (CTA).
- Consult with an Accountant:
- An accountant with experience in corporate filings and compliance can also provide valuable insights for the company’s situation.
Taking these steps can help ensure that the company accurately determines its BOI exemption status and complies with the necessary reporting requirements. If you haven't completed your initial Beneficial Ownership Report, start now by visiting https://mcd.delawareinc.com/fincen-report. Our team will try to make the process extremely easy!
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