24 DECEMBER 2023 WorldWide Drilling Resource® March 1-2 The Park Vista Hotel Gatlinburg, TN 2024 TWWA Annual Meeting & Trade Show (865) 761-4363 tnwaterwellassociation@gmail.com tnwaterwellassociation.org - Educational Sessions - Trade Show - Auction - and More! Drilling Into Money Not Boring by Mark E. Battersby The New Beneficial Owners Report Most businesses in the drilling industry - new or old - will, beginning January 1, 2024, be required to report the operation’s ownership or face a substantial fine and/or the possibility of jail. A new law requires the filing of a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). Thanks to this new rule, all domestic and foreign businesses formed or registered with a state will be required to report BOI. The new law was designed to provide law enforcement with BOI for detecting, preventing, and punishing terrorism, money laundering, and other misconduct through business entities. All so-called “Reporting Companies” formed on or after January 1, 2024, must report both their Beneficial Owners and Company Applicants within 30 days of their formation or registration. Existing businesses have until January 1, 2025. The key for filing is whether the entity was required to file with the secretary of state or similar office when the business was created. According to many experts, it’s quite possible that sole proprietorships and most general partnerships will not have to file a BOI report because they aren’t required to file formation documents. The term “Beneficial Owner,” “includes any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25% of the ownership interests of the reporting company.” Beneficial Owners can also be anyone with a significant role in the management or direction of these entities. While there is no fee for filing BOI reports, there are, of course, substantial penalties for failure to comply. Willful failure to report or willfully providing false beneficial ownership information will be punishable with a civil penalty of up to $500 per day plus a possible criminal fine of $10,000 and up to two years in prison, or both. There are 23 categories of entities which are exempt from the BOI reporting filing rules. Most exemptions are for entities already subject to substantial federal or state regulation. There is also an exemption for so-called “large operating companies,” which meet three requirements, including employing more than 20 full-time employees in the U.S. and with gross receipts or sales exceeding $5 million. Now is the time for every drilling company to think about filing their operation’s initial BOI report. Reports are to be filed electronically with FinCEN any time after January 1, 2024, via their website. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com
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