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  • Writer's pictureNancy C. Prager

Beneficial Ownership Information Reporting

In an earlier post Prager Law provided some insight into the Beneficial Ownership Information Reporting that was going to be required under the Corporate Transparency Act.  Under the CTA almost all businesses operating in the United States would be required to report who their “beneficial owners” are to the Financial Crimes Enforcement Network (“FinCEN”) at the US Department of Treasury as of January 1, 2024.  Failure to file the information can result in both civil and criminal penalties.


At the time, there was some effort in Congress to delay the implementation of the law.  There was also great uncertainty as to whether the Treasury Department would be able to launch on time.  Additionally, there was concern that the process would be so complicated it would create (yet another) regulatory compliance cost for small businesses.


Guess what?!?


Beneficial Ownership Information Reporting is now live on the FinCEN website, and they have made it (relatively) easy to file the required information.  Most businesses should be able to complete the report on their own.


When we say “most” businesses, we mean all businesses operating in the United States, whether domestic or foreign, that are not otherwise exempt from the registration requirement.  Businesses that are exempt are generally otherwise required by the United States government to report beneficial ownership (e.g. banks, insurance companies, publicly traded companies) or qualify as “large operating companies.”  A “large operating company” is an entity with at least $5 million in gross receipts or sales earned in the United States that (i) employs more than 20 full-time employees in the United States, (ii) has a physical office in the United States from which it operates, and (iii) has filed federal income tax or information returns in the United States for the previous year. Additionally, subsidiaries of an entity exempt from registration will likely also be exempt (but not necessarily).


Needless to say, most businesses in the United States will be required to comply with the Beneficial Ownership Information Reporting (the “Report”) requirements moving forward (a “Reporting Company”).  Every new business that is not otherwise exempt created or registered in 2024 will have 90 days to file the Report from the date of formation (after 2024 the Report will be required to be filed within 30 days).  Additionally, all businesses not otherwise exempt created or registered prior to 2024 must file the Report by December 31, 2024. 


The Report requires that businesses disclose all Beneficial Owners which are individuals who directly or indirectly either exercise “substantial control” or owns or controls at least 25% of the ownership interests in the Reporting Company. Significantly, a person may have “substantial control” over a Reporting Company without owning any ownership interest in it and some businesses may not have any individuals who own 25% or more of the ownership interests.  Individuals who exercise substantial control include those who:


  1. serve as a senior officer of the Reporting Company;

  2. have the ability to appoint or remove senior officers or the majority of board members;

  3. direct, determine, or have substantial influence over important decisions; or

  4. have any other type of substantial control over the company.


FinCEN has provided a Small Entity Compliance Guide which addresses most questions Reporting Company’s will have.  Additionally, FinCEN has created a step by step guide to fill out the Reports which can be found here.


While filing the Report will be relatively easy for most Reporting Companies, Prager Law is prepared to assist in the process for those who need a little extra help.  Feel free to reach out to us at info@pragerlaw.us.

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