Understanding BOI Reporting Obligations for Active and Inactive LLCs
Important notice: Most people miss the BOI requirement for LLCs for Rentals and Self-employed Business
Single-member LLCs (disregarded for tax) are also subject to the BOI Reporting Requirement.
If you have rentals placed in LLCs and you reported those rentals on your personal tax return, then you also need to file BOI for those LLCs.
If you are self-employed through your LLC but reported the income and expenses of that business on Schedule C of your personal tax return, you also need to report BOI for that LLC.
The default position is to report BOI for every LLC you have, even if you don’t file tax for those LLCs or if those LLCs are reported on your personal tax return. There are 26 exceptions to filing BOI for LLCs, but those exceptions mainly apply to banks and financial institutions.
You even have to report LLCs that are inactive unless those LLCs meet all of these requirements
Must have been in existence on or before January 1, 2020.
Is not engaged in an active business.
It is not owned by a foreign person.
Has not experienced a change in ownership in the preceding 12-month period.
Has not sent or received funds in an amount greater than $1,000 in the preceding 12-month period.
Does not hold any assets, domestic or foreign.
If you fail one of the six requirements above, your inactive LLC must file BOI. Therefore, any inactive LLCs created after 1/1/2020 need to be reported for BOI.
LLCs that hold assets (such as stocks or houses) but provide no income/expense (therefore, your CPA will not report them on any tax returns) will also need to be reported for BOI.
Please get in touch with Kevin@refractionalcfo.com if you have any questions.
