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 [. . .]

What is a FinCEN Identifier & How Can I Use It?

Question: What is a FinCEN Identifier?

Answer: A “FinCEN identifier” is a unique identifying number that FinCEN will issue to an individual or reporting company upon request after the individual or reporting company provides certain information to FinCEN.

An individual or reporting company is not required to obtain a FinCEN identifier.
An individual or reporting company may only receive one FinCEN identifier.
Your company may include FinCEN identifiers in its BOI report instead of certain required information about beneficial owners or company applicants.

Is a Manager of an LLC a Beneficial Owner?

Question: Homer Simpson is a manager of World Wide Widgets, LLC, but he is not a member. Is Homer a beneficial owner of the LLC?

Answer: Yes because as a manager he can make important decisions on the LLC’s behalf, thereby exercising substantial control over it.

Source: Small Business Compliance Guide pages 26

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 [. . .]

Why You Should Get a FinCEN Identifier

Question: Should I get a FinCEN Identifier?

Answer: It depends. If you do not own 25% or more of a reporting company and do not control a reporting company you do not need a FinCEN identifier. However, if you own 25% or more of more than one reporting company or have substantial control of more than one reporting company I recommend that you get a FinCEN identifier because it will make it very simple for you to give your personal information to reporting companies.

Instead of giving a [. . .]

What is a FinCEN Identifier?

Question: What is a FinCEN identifier?

Answer: A FinCEN identifier is a code issued by FinCEN to a person or an entity that can be used to identify the person or entity in a FinCEN report. When a FinCEN identifier is used in a FinCEN report that required information about the beneficial owner or applicant does not have to be included in the report.

What if a Trust Owns a Reporting Company?

Question: If a Trust owns 25% or more of a reporting company is the trustee a beneficial owner of the reporting company?

Answer: Yes. A beneficial owner of a reporting company is any individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise exercises substantial control over the entity or owns or controls not less than 25 percent of the ownership interests of the reporting company.

The trustee of a trust is the legal owner of the trust’s assets. Normally the trustee’s [. . .]

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