Is an LLC’s or LP’s Tax Matters Partner a Beneficial Owner?

Question: Is a reporting company’s designated “partnership representative” or “tax matters partner” a beneficial owner?

Answer: It depends. A reporting company’s “partnership representative,” as defined in 26 U.S.C. 6223, or “tax matters partner,” as the term was previously defined, but has been repealed, is not automatically a beneficial owner of the reporting company. However, such an individual may qualify as a beneficial owner of the reporting company if the individual exercises substantial control over the reporting company, or owns or [. . .]

What are the Beneficial Owner Exceptions?

Question: Who qualifies for an exception from the beneficial owner definition?

Answer: There are five instances in which an individual who would otherwise be a beneficial owner of a reporting company qualifies for an exception. In those cases, the reporting company does not have to report that individual as a beneficial owner to FinCEN. The five exceptions are:

1. Minor Child: An individual qualifies for this exception if the individual is a minor child, as defined under the law of the State or [. . .]

Is a Company Created in a U.S. Territory a Reporting Company?

Question: Can a company created or registered in a U.S. territory be considered a reporting company?

Answer: Yes. In addition to companies in the 50 states and the District of Columbia, a company that is created or registered to do business by the filing of a document with a U.S. territory’s secretary of state or similar office, and that does not qualify for any exemptions to the reporting requirements, is required to report beneficial ownership information to FinCEN. U.S. territories are the Commonwealth of Puerto Rico, [. . .]

Can a Sole Proprietorship Be a Reporting Company?

Question: Can a sole proprietorship be a reporting company?

Answer: No, unless a sole proprietorship was created (or, if a foreign sole proprietorship, registered to do business) in the United States by filing a document with a secretary of state or similar office. An entity is a reporting company only if it was created (or, if a foreign company, registered to do business) in the United States by filing such a document. Filing a document with a government agency to obtain (1) an IRS employer [. . .]

Must an Attorney or CPA File a FinCEN BOI Report?

Question: Is a reporting company required to use an attorney or a certified public accountant (CPA) to submit beneficial ownership information to FinCEN?

Answer: No. FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers such as lawyers or accountants.

Who Can File a FinCEN BOI Report?

Question: Who can file a FinCEN BOI report on behalf of a reporting company, and what information will be collected on filers?

Answer: Anyone whom the reporting company authorizes to act on its behalf—such as an employee, owner, or third-party service provider—may file a FinCEN BOI report on the reporting company’s behalf.

What Happens if a Company Fails to File Its FinCEN BOI Report?

Question: What happens if my company does not file its FinCEN BOI report within the required timeframe?

Answer: If a person willfully fails to report complete or updated beneficial ownership information to FinCEN as required under the Corporate Transparency Act, FinCEN will determine the appropriate enforcement response in consideration of its published enforcement factors.

The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in [. . .]

Warning: Legal Consequences of Filing a False FinCEN BOI Report

This article is a must-read for every person who will file a FinCEN BOI Report. Do not file a FinCEN BOI report unless you understand the legal consequences of filing a false report which is explained in this article.

If you submit or intend to submit a FinCEN Beneficial Owner Information report you need to understand that you can be fined and/or imprisoned if you file a FinCEN BOI report that contains false or fraudulent information. People who file FinCEN reports for companies [. . .]

Who can Access Beneficial Ownership Information in a FinCEN Report?

Question: Who can access beneficial ownership information in a FinCEN BOI report?

Answer: FinCEN will permit Federal, State, local, and Tribal officials, as well as certain foreign officials who submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. Financial institutions will have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the [. . .]

What IDs are Acceptable on FinCEN BOI Reports?

Question: What are some acceptable forms of identification that will meet the reporting requirement?

Answer: The only acceptable forms of identification are:

A non-expired U.S. driver’s license (including any driver’s license issued by a commonwealth, territory, or possession of the United States);
A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;
A non-expired passport issued by the U.S. government; or
A non-expired passport issued by a foreign government [. . .]

What Applicant Information Is in a FinCEN BOI Report?

Question: What information will a reporting company have to report about its company applicants?

Answer: For each individual who is a company applicant, a reporting company will have to provide:

The individual’s name;
Date of birth;
Address; and
An identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.

The reporting company will also have to report an image of the [. . .]

What is a FinCEN Report Applicant?

Question: What is an applicant and when does a reporting company have to include applicant information in its FinCEN report filed under the Corporate Transparency Act.

Answer: All reporting companies formed after 2023 must include applicant information in their FinCEN report. Reporting companies formed before 2024 do not include applicant information in their FinCEN reports.

An applicant is individual who forms a reporting company by filing an application to form a corporation, limited liability company, or other similar entity under the laws of [. . .]

Who is the Beneficial Owner of a Company Owned by Another Company?

Question: Homer Simpson and Marge Simpson own 25% of World Wide Widgets, LLC, as community property. Ned Flanders, a single man, owns 75% of the LLC. World Wide Widgets, LLC, owns 100% of two subsidiary LLCs called Sub 1, LLC and Sub 2, LLC. Which companies must file FinCEN reports and who is/are the beneficial owner(s) that must be named in the FinCEN report?

Answer: Each company must file a FinCEN report. Ned, Homer and Marge are all deemed to be beneficial owners of all three [. . .]

Kill Your Inactive Entities

Question: I have an LLC that I formed years ago that is dormant. It does not have any assets or get any income. It is not operating a business. Will my inactive LLC have to file a FinCEN report that contains beneficial owner information?

Answer: Yes if it exists on January 1, 2025. To avoid filing a FinCEN report and the CTA’s $500/day late filing penalty you should terminate/kill all inactive entities before January 1, 2025.

How to Terminate an AZ LLC or PLLC: If [. . .]

FinCEN Extends Report Filing Deadline for Entities Formed After 2023

The following is the text of a November 29, 2023, FinCEN news release:

The Financial Crimes Enforcement Network (FinCEN) issued a final rule today that extends the deadline for certain reporting companies to file their initial beneficial ownership information (BOI) reports with FinCEN. Reporting companies created or registered in 2024 will have 90 calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial reports. FinCEN will not accept BOI reports from reporting companies [. . .]

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