Companies Must Comply with Beneficial Ownership Reporting Requirements

Clarifying Guidelines from FinCEN

The Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury, has issued guidelines to clarify whether certain companies are considered reporting companies under the Corporate Transparency Act.

Not All Foreign Entities Need to Register

Not all states require foreign entities to register by filing a document with a secretary of state or similar office to do business in the state. However, if a foreign entity files such a document, it is considered a reporting company unless an exemption applies.

Exemptions from Reporting Requirements

Companies should also consider exemptions from reporting requirements, such as:

• Tax-exempt entities like foundations that may not need to report beneficial ownership information.
• Refer to FinCEN’s Small Entity Compliance Guide (Chapter 1.2) for more guidance on exemptions: “Is my company exempt from the reporting requirements?”

Formation and Registration Status Matter

In other cases, the activity or revenue of a company does not determine whether it is a reporting company. Instead, companies must consider their formation and registration status to determine if they are required to report beneficial ownership information.

Sole Proprietorships and US Territories

• Sole proprietorships are not typically considered reporting companies unless they were created or registered in the United States by filing a document with a secretary of state or similar office.
• Companies created or registered in U.S. territories such as Puerto Rico, American Samoa, Guam, and the U.S. Virgin Islands are also required to report beneficial ownership information.

BOI Reporting Requirements Apply to S-Corporations

The BOI reporting requirements do apply to S-Corporations, which must comply even if they qualify for pass-through treatment under Subchapter S of the Internal Revenue Code.

Rare Exceptions

In rare cases where a domestic corporation or limited liability company is not created by filing a document with a secretary of state or similar office, it may not be considered a reporting company. Homeowners associations (HOAs) can also take different forms and may qualify for exemptions from reporting requirements if they meet certain criteria.

Review FinCEN’s Guidelines

Companies should review FinCEN’s guidelines to determine their reporting obligations under the Corporate Transparency Act.