Beneficial Ownership Reporting, Simplified
When Filing Is Due Plus Who Is Exempt
In a move towards increased financial transparency, the Financial Crimes Enforcement Network (FinCEN) has introduced Beneficial Ownership Reporting requirements, effective from January 1, 2024. This new regulation aims to identify the individuals behind certain entities and enhance efforts to combat financial crimes.
Reporting Timeline
1. Existing Entities (Before 2024)
For entities existing before 2024, the Beneficial Ownership Report must be filed within the calendar year 2024, specifically by December 31, 2024.
2. Entities Created During 2024
- If the entity is created during 2024, taxpayers have 90 days after creation to file the report.
- Transitionary measure: The 90-day window for 2024 aims to facilitate a smooth transition into the new reporting process.
3. Entities Created After 2024 (Starting 1/1/2025)
- From January 1, 2025, newly created entities will have a reduced filing window of 30 days after creation.
Large Operating Company Exemption
Most existing entities may be exempt from the Beneficial Ownership Reporting if they meet the criteria for the “large operating company” exemption. To qualify, a company must satisfy all six of the following requirements:
- Employment Threshold:
- Employs more than 20 full-time employees.
- Geographical Presence:
- The 20 full-time employees must be located within the United States.
- Physical Office Presence:
- The entity must have an operating presence at a physical office in the United States.
- Tax Filing History:
- Filed a Federal income tax or information return for the previous year demonstrating more than $5 million in gross receipts.
- IRS Forms Submission:
- The greater than $5 million of gross receipts should be reported on Forms 1120, 1120-S, 1065, or other applicable IRS form.
- U.S. Sourced Gross Receipts:
- U.S. sourced gross receipts must be greater than $5 million.
Navigating New Business Requirements
The information provided here is for general informational purposes only and does not constitute legal advice. It is important to remember that the law is complex and constantly evolving, and what applies in one situation may not apply in another. Legal advice should always be sought from a qualified professional who is familiar with the specific facts and circumstances of your situation. Do not rely on the information provided here as a substitute for professional legal advice.
Questions?
Dealership Advisors
Kristin specializes in tax services, particularly for pass-through entities and complex individual matters. Her clients span industries like dealerships, real estate, wholesaling, and professional services. Her approach goes beyond compliance, addressing clients’ pain points with a genuine care that ensures understanding, compliance, and strategic insights.