Filing the Beneficial Ownership Information Report (BOIR) is a crucial step in maintaining regulatory compliance for businesses in the United States. However, even minor errors can lead to the rejection of a BOIR filing, resulting in delays, penalties, and compliance issues. To ensure your filing is successful, it's important to understand the common reasons for rejection and how to avoid them. This article will explore the top reasons BOIR filings are rejected and provide tips to ensure smooth submission.

 

 

1. Incomplete or Incorrect Beneficial Ownership Information

One of the most common reasons BOIR filings get rejected is incomplete or incorrect information about the company’s beneficial owners. Beneficial owners are individuals who hold significant control over or ownership in the company, typically defined as owning 25% or more of the business. Missing key details such as full legal names, addresses, or Social Security numbers can result in rejection.

How to Avoid It:

• Ensure that all beneficial ownership information is accurate and up-to-date before filing.

• Double-check details such as names, addresses, and ownership percentages.

• Regularly review your company’s records to ensure they reflect any changes in ownership or control.

 

 

2. Failure to Disclose All Beneficial Owners

Another frequent issue is the failure to disclose all individuals who meet the definition of a beneficial owner. Some companies mistakenly believe that only the CEO or primary shareholders need to be listed. However, any individual who meets the ownership or control threshold must be included in the BOIR.

How to Avoid It:

• Review the FinCEN guidelines on who qualifies as a beneficial owner to ensure you’re listing all relevant individuals.

• Include all officers, directors, and major stakeholders who meet the ownership criteria.

• Conduct internal reviews to identify any additional individuals who should be reported.

 

 

3. Errors in Company Information

Errors in basic company information, such as the business name, Employer Identification Number (EIN), or registration details, can also lead to a rejected BOIR filing. These errors can arise from simple data entry mistakes or failing to update information after company changes.

How to Avoid It:

• Carefully review all company information before submitting the BOIR.

• Ensure that the business name, EIN, and other details match exactly with the records maintained by the relevant authorities.

• Keep your company’s registration details up to date with state and federal agencies to avoid discrepancies.

 

 

4. Missing Signatures or Authorization

Forgetting to include required signatures or failing to provide the appropriate authorization for the BOIR filing can result in rejection. Only authorized individuals, such as company officers or legal representatives, can sign the BOIR, and failure to comply with this requirement will delay the filing.

How to Avoid It:

• Verify who is authorized to sign and submit the BOIR on behalf of the company.

• Ensure that all required signatures are included and that they meet the necessary legal requirements.

• Consult with legal counsel if there is any doubt about who is authorized to file on behalf of the business.

 

 

5. Late Submission

Timely submission of the BOIR is critical. Missing the deadline for filing the report can not only result in rejection but also subject the company to fines and penalties. The Financial Crimes Enforcement Network (FinCEN) imposes strict deadlines for filing, and businesses must comply to avoid these consequences.

How to Avoid It:

• Create a timeline or calendar to track important filing deadlines for the BOIR.

• Use automated reminders or compliance software to ensure you file on time.

• Submit the BOIR well in advance of the deadline to account for any potential issues or delays in the process.

 

 

6. Not Including Changes in Beneficial Ownership

If there are any changes in beneficial ownership after the initial BOIR filing, businesses are required to update their submission within a certain timeframe. Failure to do so can lead to a rejected or outdated filing.

How to Avoid It:

• Regularly review your company’s ownership structure and update the BOIR as needed.

• Notify the appropriate regulatory authorities promptly if there are changes in beneficial ownership.

• Keep a clear record of any changes in ownership to streamline the updating process.

 

 

7. Using Outdated Forms or Filing Systems

Using outdated BOIR forms or submitting filings through outdated systems can result in rejection. Over time, regulations and filing requirements may change, so it's important to stay up to date with the latest forms and submission methods.

How to Avoid It:

• Check for updates to the BOIR forms and filing system before submitting your report.

• Regularly monitor FinCEN or other relevant authorities for any changes in the filing process.

• Use modern compliance software that automatically updates with the latest requirements.

 

 

8. Failing to Comply with State and Federal Regulations

In some cases, businesses may overlook state-specific requirements when filing the BOIR. Each state may have its own additional regulations regarding beneficial ownership reporting, and failure to comply with these can result in rejection or additional penalties.

How to Avoid It:

• Research the specific BOIR requirements for the state in which your business operates.

• Ensure that you are meeting both state and federal regulations when submitting the BOIR.

• Consult with a legal expert familiar with your state’s requirements to ensure full compliance.

 

 

9. Submitting Incorrect Payment for Filing Fees

Some BOIR filings may require payment of a filing fee, and submitting an incorrect or insufficient amount can cause the filing to be rejected. Failure to pay the necessary fees may also result in delays or penalties.

How to Avoid It:

• Verify the required filing fees before submission and ensure that the correct payment method is used.

• Keep a record of payment to provide proof if there are any discrepancies.

• Consult with your financial department or legal advisor to confirm the proper fee amount.

 

 

Conclusion

Timely and accurate BOIR filing is essential for maintaining regulatory compliance and avoiding penalties. By understanding the common reasons for rejection and implementing strategies to prevent them, businesses can ensure that their filings are accepted without issue. Staying organized, using the latest forms, and keeping all information up-to-date are key steps to successful BOIR submission. Taking a proactive approach can save time, prevent fines, and maintain your company's good standing with regulatory authorities.