US Beneficial Owner Reporting: Who, What, When and How

Summary of Reporting Companies

An entity that is created by filing a document with a secretary of state or any similar office and is not listed among the 23 exemptions is considered a “Reporting Company” and required to comply. Generally, US exempt companies include companies that are publicly traded, large companies, tax exempt companies, or registered financial institutions.  Non-US entities are included under this definition if they are formed under the law of a foreign country and have registered to do business in the US. 

It is important to note that despite the regime name including the word “Corporate,” and the regulations using the term “Reporting Companies,” the legal form of the entity does not determine inclusion in the regime.  Subject to the applicability of specific exemptions, many types of entities will be caught, including limited liability partnerships, limited liability limited partnerships, business trusts, and most limited partnerships, in addition to corporations and LLCs.

For more information see here.

Who needs to be reported?

Despite this being a “Beneficial Ownership Information” reporting regime, beneficial owners are not the only ones being reported.  In certain circumstances company applicants will also be subject to reporting. 

Beneficial owners include any non-exempt individual who, directly or indirectly, either;

• Exercises direct or indirect substantial control over a reporting company, or
• Owns or controls, directly or indirectly, at least 25 percent of the ownership interests of a reporting company.

 Substantial control

 The rules identify a range of activities that could constitute substantial control of a reporting company, largely targeting anyone who makes important decisions on behalf of the company.  The individual is considered to be exercising substantial control if they fall into any of the following categories:

• They are a senior officer, including: president, CFO, CEO, COO, general counsel, or any other officer who performs a similar function;
• They have the authority to appoint or remove certain officers or a majority of directors (or similar body);
• They are an important decision maker who directs, determines, or has substantial influence over important decisions made by the Reporting Company, including decisions regarding the company’s business, finances, and structure; and
• They have any other form of substantial control.

Ownership

Ownership interests are also defined broadly and include the following:

• Equity, stock, or voting rights;
• A capital or profits interest;
• Convertible instruments;
• Options or other non-binding privileges to buy or sell any of the above; and
• Any other instrument, contract, or other mechanism used to establish ownership

Company applicants include only two persons:

1. The individual who directly files the document that creates the entity, or in the case of a foreign Reporting Company, the document that first registers the entity to do business in the United States; and
2. The individual who is primarily responsible for directing or controlling the filing of the relevant document by another.

Note that company applicants do not need to be reported by companies created or registered before 1 January 2024.

What information needs to be reported?

FinCen expect every Reporting Company to report at least one beneficial owner, and all individuals who own or control at least 25% of the ownership interest of the company.  Each report must contain Reporting Company identifying information and detail about each of its beneficial owners and company applicants:

Reporting Company information

1. Legal name
2. Trade name or d/b/a names
3. Current street address of its principal place of business in the US
4. State, tribal, or foreign jurisdiction of formation (foreign entities must also report state or tribal jurisdiction of first registration
5. Taxpayer identification number (“TIN”) (foreign entities can provide a foreign TIN if a US TIN has not been issued)
6. Indication of whether the report is an initial, update, or corrected report

Beneficial owner and applicant information

1. Full legal name
2. Date of birth
3. Complete current residential address (company applicants can report a business address)
4. Tax residence
5. A unique identifying number (SSN or foreign TIN)
6. Image of a passport, driver’s license, or other official document containing this number

Option to obtain a FinCEN Identifier

In lieu of reporting the above information, Reporting Companies and individuals may choose to electronically apply for a FinCEN identifier.  Individuals must include the above information in their application, and companies can request this identifier upon submission of their first report.

When to report

The filing deadlines vary based on the effective date of the company’s registration:

• Prior to 1 January 2024 – 1 January 2025
• After 1 January 2024 – within 90 calendar days
• After 1 January 2025 – within 30 calendar days

How to report

Contact Optax or file the report electronically directly FinCEN.  FinCEN also allows Reporting Companies to report using APIs with their reporting system.