Can a Trustee be a Beneficial Owner?

Question: Can a trustee of a trust that owns an interest in a company be a beneficial owner?

Answer: Yes. A trustee of a trust or similar arrangement may exercise substantial control over a reporting company. The following individuals may hold ownership interests in a reporting company through a trust or similar arrangement:

A trustee or other individual with the authority to dispose of trust assets.
A beneficiary who is the sole permissible recipient of trust income and principal or who has the right to [. . .]

Who is a Beneficial Owner?

If your company is a reporting company, your next step is to identify its beneficial owners. A beneficial owner is any individual who, directly or indirectly:

Exercises substantial control over a reporting company; or
Owns or controls at least 25 percent of the ownership interests of a reporting company.

An individual might be a beneficial owner through substantial control, ownership interests, or both. Reporting companies are not required to report the reason (i.e., substantial control or ownership interests) that an individual is a beneficial [. . .]

Does a Subsidiary of a Report Exempt Entity Have to File a FinCEN Report?

Question: If an entity is exempt from filing a FinCEN Report, is its wholly-owned subsidiary also exempt from filing a FinCEN Report?

Answer: A subsidiary of an entity that is exempt from filing a FinCEN Report is also exempt from filing a FinCEN Report if the subsidiary entity’s ownership interests are controlled or wholly owned, directly or indirectly, by any of these types of exempt entities:

Securities reporting issuer, as defined in Exemption #1;
Governmental authority, as defined in Exemption #21;
Bank, as defined in Exemption #3;
Credit union, as [. . .]

Does an Entity that Assists a Tax-Exempt Entity Have to File a FinCEN Report?

Question: Is an entity that assists a tax-exempt entity exempt from filing a FinCEN Report?

Answer: An entity qualifies for this exemption if all four of the following criteria apply:

1. The entity operates exclusively to provide financial assistance to or hold governance rights over, any tax-exempt entity that is exempt from filing a FinCEN Report.

2. Is The entity is a United States person as defined in section 7701(a)(30) of the Internal Revenue Code of 1986.

3. The entity [. . .]

Does a Tax-Exempt Entity Have to File a FinCEN Report?

Question: Is a tax-exempt entity exempt from filing a FinCEN Report?

Answer: An entity qualifies for this exemption if any of the following four criteria apply:

1. The entity is an organization that is described in section 501(c) of the Internal Revenue Code of 1986 (Code) (determined without regard to section 508(a) of the Code) and exempt from tax under section 501(a) of the Code.

2. The entity is an organization that is described in section 501(c) [. . .]

Does an Inactive Entity Have to File a FinCEN Report?

Question: I have an inactive entity. Must it file a FinCEN Report?

Answer: An inactive entity does not have to file a FinCEN Report if all six of the following criteria apply:

1. The entity was in existence on or before January 1, 2020.

2. The entity is not engaged in active business.

3. The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially. “Foreign person” means a person who is not a United States person. A [. . .]

Does a 20+ Employee Company Have to File a FinCEN Report?

Question: My company has a lot of employees. Is it exempt from filing a FinCEN Report?

Answer: An entity is exempt from filing a FinCEN Report if all six of the following criteria apply to the entity:

1. The entity employs more than 20 full time employees, when applying the meaning of full-time employee provided in 26 CFR 54.4980H-1(a) and 54.4980H-3. In general, “full-time employee” means, with respect to a calendar month, an employee who is employed an average of at least 30 [. . .]

FinCEN’s Estimate of Time & Cost to File a FinCEN Report

Question: How much time will I have to spend if I do a “do-it-yourself” FinCEN report?

Answer: The following text is from a Notice by the U.S. Treasury Department on 09/29/2023.

FinCEN estimates that 32,556,929 entities will submit initial beneficial owner information reports (“BOIRs”) in Year 1 (2024). In Year 2 (2025) and beyond, FinCEN estimates that the number of initial BOIRs filed will be 4,998,468 per year.

FinCEN estimates the average burden of reporting BOI as 90 minutes per response for [. . .]

FinCEN Beneficial Owner Report Due Date

On September 30, 2022, the Financial Crimes Enforcement Network finalized and published Corporate Transparency Act Treasury Regulation 31 CFR § 1010.380. This regulation provides the following deadlines for filing beneficial owner reports with FinCEN:

All reporting companies formed before 2024 must file their initial FinCEN report not later than January 1, 2025.

All reporting companies formed after 2023 must file their FinCEN report not later than 30 days after the entity was formed/created.

Amendments to a FinCEN report must be filed within [. . .]

FinCEN Issues Final Rule for Beneficial Ownership Reporting

On September 29, 2022, FinCEN issued the following press release:

“Today, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) took a historic step in support of U.S. government efforts to crack down on illicit finance and enhance transparency by issuing a final rule establishing a beneficial ownership information reporting requirement, pursuant to the bipartisan Corporate Transparency Act (CTA). The rule will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about [. . .]

Federal Government Incompetence with No End in Sight

The Corporate Transparency Act became a law on January 1, 2021. The CTA provided that it would become effective January 1, 2022. This law requires almost all existing companies formed in the United States since the U.S. became a country to file a report with the Financial Crimes Enforcement Network (FinCEN) that discloses information about each of the company’s “beneficial” owners. A beneficial owner is a person, entity or trust that own 25% or more of the company or who has substantial control of the company.

These FinCEN [. . .]

25+ Million Entities Must File a FinCEN Report Required by the Corporate Transparency Act

During a Senate Financial Services and General Government Appropriations Subcommittee U.S. Senator Cindy Hyde-Smith questioned Deputy Treasury Secretary Wally Adeyemo about the Biden administration’s actions that added new regulatory burdens on small businesses. Senator Hyde-Smith also told Adeyemo that the Corporate Transparency Act imposes financial and compliance burdens on small businesses. The CTA created a Beneficial Ownership Database that is intended to help fight financial crimes by bringing transparency with respect to who forms, owns, and controls American businesses and foreign entities that do business in [. . .]

Senators’ Letter to Treasury Secretary Criticizing FinCEN’s Failure to Finalize the Corporate Transparency Act

On May 10, 2022, U.S. Senators Marco Rubio (R-FL) and Elizabeth Warren (D-MA) sent a letter to U.S. Treasury Secretary Janet Yellen and Acting Director of the Financial Crimes Enforcement Network (FinCEN) Himamauli Das regarding the delayed implementation of Rubio’s Corporate Transparency Act (CTA), which was signed into law in 2020 (P.L. 116-283). Senators Chuck Grassley (R-IA), Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), Bob Menendez (D-NJ), and Bill Cassidy (R-LA) also signed the letter.

“The Treasury Department has yet to finalize the implementation of the CTA—or even [. . .]

Senators’ Letter to FinCEN Asking It to Implement the Corporate Transparency Act

On May 5, 2022, U.S. Senators Marco Rubio (R-FL), Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), and Chuck Grassley (R-IA) sent a bipartisan comment to the Financial Crimes Enforcement Network (FinCEN) encouraging the efficient, effective implementation of a beneficial ownership reporting system, as required by the Corporate Transparency Act (CTA).

The comment is below.

To Whom It May Concern,

We write in response to the Financial Crimes Enforcement Network’s (FinCEN) advance notice of proposed rulemaking regarding to the implementation of the Corporate Transparency Act (CTA), enacted into law as part of [. . .]

FinCEN’s Acting Director Testifies before Congress

FinCEN Director Him Das testified on April 28, 2022, before the House Committee on Financial Services. Very little of his written statement dealt with the Corporate Transparency Act. He closed by saying:

“In closing, timely and effective implementation of the AML Act, which includes the CTA, is a top priority. . . . limited resources have presented significant challenges to meeting the implementation requirements of our expanded mandate under the AML Act, including the CTA’s beneficial ownership requirements. As you are aware, we are missing deadlines, [. . .]

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