Corporate Transparency Act & Beneficial Ownership Information (BOI)

How long that injunction remains in effect if it becomes a permanent injunction in some months down the road if it ends up before the Supreme Court. All of those are questions that we don't know the answer to right now, but from my reading of the case, even though it specifies the January 1st, 2025 filing deadline, the injunction is on enforcement of any portion of the CTA or any portion of the reporting regulations that were published. So that really to me seems that it's effectively in joining the enforcement of any reporting requirement, even for companies that are formed that have a different reporting deadline than that January 1st, 2025 deadline. I don't know what Jen's take on that might be.

Jenn Sklar:I agree. I mean, I think for everybody on this call, I think the most important thing is that nothing's due in less than a month based on this ruling, but it is open to interpretation. I think the concern about the preliminary injunction was to get it out there now so that it would avoid the people rushing to file for January 1st, 2025. But I mean, it's very unpredictable about where this ultimately will go.

Sarah Adkisson:And one thing I see a couple of people already asking, even though it's in a district court in Texas, it is a nationwide injunction. So a federal court, even a smaller district court can issue a nationwide injunction that halts it nationwide. This isn't just apply to the district in Texas. This is a nationwide injunction. So there was a previous case in Alabama where even though they ruled it was unconstitutional, they only stopped the fin end from enforcing it against the name plaintiffs. It was not a nationwide injunction. This one is a nationwide injunction. So this one, it is applicable across the country.

Jenn Sklar:And again, it's the preliminary injunction that is the applicable across the country. It's not a ruling. So if this case were to go to a ruling and this particular circuit or the district court, that circuit was going to come out with a final ruling, that ruling isn't binding on other circuits just like every other. It has to be, obviously the Supreme Court is generally where it becomes the supreme law of the land. So we could end up with circuit splits at some point as well. But right now this applies to everybody in every state. And so we're happy to sit and talk about it with all of you still because we all had plans together. But I feel like maybe we'll just sort of answer some questions a little bit in the beginning maybe, and then we can maybe get into some of the content.

Sarah Adkisson:Yeah, I do see a couple of other questions, whether with the new administration, if they think that administration will pursue this, I mean, right now I suspect that this administration right now, the DOJ is absolutely going to pursue it and they may request expedited decisions because of that to see if they're granted it or not. But I mean, that is a good question. I don't know if it'd be a priority for the incoming administration. Probably not.

Jenn Sklar:Yeah, probably not. They have way

Sarah Adkisson:Too many other may other things. The injunction just kind of sits there for a bit.

Jeff Kelson:Yeah, I think that the way I sum it up in my mind is that it's sort of a hurry up and wait. So right now no reporting company is compelled to file this by let's say right now, but something could happen next week. We don't know. The case is going to be appealed and probably accelerated in its appeal. So the best thing to do is stay tuned.

Will communicate any changes in that. But right now, this case is different than the previous cases. The previous cases were very targeted to the plaintiffs. I think the National Small Business Merchants Association was the Alabama case. This one is not earmarked to the plaintiffs. It has an impact for every reporting company, and that's the big distinction with this case. Whether the jurisdiction was Texas or whatever state it would've been in, it has impact for reaching. So right now it's just on hold and we will see. What do you guys think?

Sarah Adkisson:I saw a couple people asking what happens with the circuits split? Jen, do you want to take that or me?

Jenn Sklar:You can take it in this instance or just in general, a general circuit split

Sarah Adkisson:With this. In particular, if one circuit says it's unconstitutional and one says it is typically speaking with a circuit split, that's binding on the circuit only. But if another circuit were to put in place another injunction that was nationwide, then my understanding is that that injunction would carry except for the circuit where it was ruled not or to be constitutional.

Jenn Sklar:Yes, because the preliminary injunction is as it sounds preliminary, so it's before any ruling, it's before there's any substantive review of the case before any of that. So once there is a ruling, then that becomes binding on the circuit. On just the circuit and within that district. So that's why we started with, we're really not sure where this

Sarah Adkisson:Going. And obviously we will keep clients and everyone as updated as things move. It's a

Jeff Kelson:Question people believes any chance of jurisdiction could be. It's a lot of questions. There's so many I can't even keep up. So let's just summarize what our collective feelings are right now. There's nothing to do. There was this time yesterday, but right now, a funny thing happened on the way to the webinar, but right now there was nothing to do. There is no compulsion or requirement to file for the reporting company.

Sarah Adkisson:You can. I mean, having said that, if you really want to, you can still file

Jeff Kelson:Right? Because if it is lifted and you have to file, we'll have to go through all this at some time. One thing I think we should discuss guys, is what states had an extension anyway because of the hurricane? So let's go through that. Our reporting companies in those states, we can flip the slide to that extension because those folks have more time anyway,

Sarah Adkisson:We will talk about it pretty far in. But the states that were given relief for Alabama, Florida,

Jeff Kelson:We broke up Sarah,

Sarah Adkisson:Georgia, Louisiana, Penn,

Jeff Kelson:Let's see if I can find it.

Sarah Adkisson:Virginia and Vermont, which that's right. The hurricane's got as far as Vermont,

Jeff Kelson:We have to ad lib now because stuff has changed.

Sarah Adkisson:But those might be too much for clients who were in states that were impacted. Those hurricanes, depending on which state they were in and which hurricane they were impacted by, they were given six month extension from their filing date.

Jeff Kelson:So this is the fence send hurricane filing relief that regardless of the case yesterday, that these reporting companies in these states would have a six month extension from, and I believe it's from the date that their hurricane was impact. Okay. So again, that was Can you read the states again,

Sarah Adkisson:Both the date that they were impacted by the hurricane? Yes. Hold on. Alabama, Florida, Georgia, Louisiana, Pennsylvania. North Carolina, South Carolina, Tennessee, Texas, Virginia and Vermont.

Jeff Kelson:Alright. And Vermont. Right. So that's the one northern state. So these are the states that had a six month extension regardless of the case yesterday. Alright, now let's go back to, sorry about that, my flipping around. But as you can imagine, we had to be a little more nimble today to address the breaking news. So let's just go over brief quickly. What was on tap almost back to the beginning, bear with me and why we're here even. So the Corporate Transparency Act became law in 2021 at that time, and the whole reason for this act was that the fiend, the Financial Crimes Enforcement Network was concerned about money laundering, fraud, sanction, evasion, terrorism, a whole host of things. And a lot of that was because a lot of companies are set up in the United States under the Secretary of State that do not disclose who its owners are or who has significant control.

So this was the whole reason and rationale for the law. And so it's to protect national security interests and interstate and foreign commerce and any other illicit activities. So this was to bring the US United States in line with international standards. And I'm sorry, I'm just going to go through this quickly because we need to catch up the when. Well, it was supposed to be 27 days from now that any company that was in existence prior to January 1st, 2024 would have to file. And this would be, and you'll see anyone, any entity that filed with the Secretary of State single member, LLCs, LLCs, and very few trusts, very few. So these were the reporting companies and companies that had formed during 2024 would have had 90 days to have filed perhaps already if they were set up more than 90 days ago.

Let's just move ahead. And as I mentioned, LLCs, single member LLCs, limited partnerships, LLPs, S-Corp, small corps, possibly small sole proprietorships, if they had a state filing requirement, FinCEN had estimated that 32 million returns would have been filed. And I guess they got that information from all the state filings. As of November 8th, 6.5 million had been filed. So you can see there was still about 26 million to go and these companies would have to report unless they were fell under one of the exemptions. So Sarah, I think you want to take it Sarah, you there? Jen now? Jen. Jen, sorry, Jen, are you on?

Jenn Sklar:Okay. Yeah, from here, I'm here. Sorry about that.

Jeff Kelson:You can take these slides. Yeah,

Jenn Sklar:Sure. Okay. So who is a reporting company? So essentially it looks at a domestic reporting company and a foreign reporting company. So as Jeff mentioned, a domestic reporting company would be a corporation, an LLC or any other entity that is created by filing a document with the Secretary of State. It's also going to be any foreign reporting company, which is a corporation, LLC or other entity that's formed under the laws of a foreign jurisdiction. And they're registered to do business in the US by filing a similar document with the Secretary of State. There also is, I think this was a clarification FinCEN clarified that it also applies to US territories as well. So Guam, Puerto Rico, Virgin Islands, all of those. So that's essentially the entities, the reporting companies that are captured here, which is essentially a very, very large pool. There are 23 entity types that are exempt.

And there's actually a nice flow chart that Fiend has in their small entity compliance guide that was issued back in September of 2023, I believe it may have been revised a few months later. And this is the flow chart to help a company identify whether they're reporting companies. So it's a very helpful chart to take a look at. So back to the exempt entities, this is a list of the 23 exempt entities exempt into entities or exempted companies are generally in areas that are highly regulated, which makes sense because they already have to report to a governing body, whether the SEC or whomever. So a few notable ones here. So we've got accounting firms, which is what EisnerAmper is, but it is a very narrow set. So accounting firm exemption generally applies to a public accounting firm that's registered in accordance with a particular section of the Sarbanes Oxley Act.

So it's not every accounting firm. Also large operating companies, which is going to be discussed a little bit further in the next slide. And then another one are pooled investment vehicles. And there's very specific reporting requirements for foreign pooled investment vehicles. So if you're a pooled investment vehicle, then you are an exempt entity if you're a foreign pooled investment vehicle, you have some reporting requirements, but not all of the reporting requirements. And then let's talk about the large business exception. Nothing here has changed in any of the guidance. It's a company that employs more than 20 full-time employees and they have a physical office in the US and they file a federal tax return. And the gross receipts, the US source gross receipts are more than $5 million. So those are essentially the parameters for being a large operating company and being exempt from the reporting subsidiary rules. There's been some clarification on subsidiary rules, which we've included here a few of them. So subsidiary companies of exempt companies are exempt as well. To be exempt, the sub must be wholly owned or controlled by one or more exempt entities. So for example, you have to have full exemption, whether it's by one entity or multiple entities. So you can't have 50% exempt owned by an exempt entity, 50% owned by a non-exempt entity.

And there are some special reporting rules that apply when an exempt entity has an ownership interest. So obviously they don't have to do the full BOI reporting, but there is some other information that they may have to report. And lastly, exempt status. Exempt companies aren't required to file any reports, documentation to show they are exempt with. Of course, some of those exclusions or exceptions that I mentioned earlier that we'll talk about later in the presentation. A company that becomes exempt after filing their initial report, they should file an updated report, identify the company, note that they're newly exempt, and then a company that loses its exempt status should file an initial BOI report within 30 days of the status change. So our thought for all of this was always when in doubt file that still stands when the preliminary injunction is lifted or something else comes of that particular case. So I now will pass it on to Sarah.

Sarah Adkisson:All right, so now we've talked about what a reporting company is. We're going to talk about who is a beneficial owner. So a beneficial owner is any person who exercises substantial control as defined by SEN, either directly or indirectly, or any person who owns our controls, at least 25% of the reporting company. And that 25% sounds really easy, but we're going to see that it gets more complicated. So first of all, FinCEN has defined that who has substantial control is going to be any senior officer, so C-suite level officers, the president of a company, the CFO, general counsel, any other high level officer who's going to know what's going on in the company and be able to make decisions for that company. Any individual with the authority to appoint or remove one of those senior officers or majority of the board of directors or a similar governing body, an important decision maker. So that's going to be anybody who controls, directs, determines or influences important decisions about that reporting company's businesses, financial decisions, how it's structured, and then any other person who exercises substantial control, which is kind of just like a catchall. So maybe like a former owner or former founder who doesn't officially have any kind of role, but people still go and ask 'em and follow that kind of direction. So that one's a little vague, but if they can have input, they're probably going to consider to have substantial control.

So this is Finn's put together a nice infographic about who an important decision maker is and what type of decisions that they make would be considered to be important decisions essentially. So ownership interest. So the 25% of ownership interest. Ownership interest are going to include stock equity or voting rights, any capital or profits, interest convertible instruments, if it is any interest that can be converted to equity stock or voting rights or capital or profits interests, those will be included as being considered ownership. Interests and options and privileges are going to be treated as having been exercised or converted for the calculation of an ownership interest.

So this is where it gets more complicated with that 25%. So you have to calculate the ownership interest. So if you were a company that has a share of stock, sorry, that issues shares of stock, it's just going to be calculated as a percentage of the total shares of stock issued. But if there are different classes of stock, so say one has more voting power or one represents a higher value of the company, you're going to do two calculations and the higher percentage is what will be used to determine that person's ownership interest. So say somebody owns 1% of a company, but that 1% of stock is equal to all the voting stock in the company. That person may only have 1% overall in that of the overall stock, but they're going to have a hundred percent of a controlling share. So they will still be considered a beneficial owner.

For companies that issue capital or profits interests, the ownership interest is going to be calculated as a percentage of the total outstanding capital and profits interests. And for companies that do not have stock or ownership or capital profits interests, it's going to be anybody who owns or controls 25% or more of any other type or class of ownership interest in the company. So you kind of have to do an analysis there. So we can run through this example very quickly of who would be considered a beneficial owner and therefore would have to be reported by the reporting company. So we have a reporting company that's a corporation that is stock. We have individual F who's an important decision maker. We have company Y and company Z that each own 50% of the stock of the reporting company. And then we have individuals, A through E.

Individual A is both CFO and owner of 25 and 30% of stock and CFO of company Y and company Z, individual B owns 70% of the stock of company Y, individual C, the CEO, and president of company Z, and its 25% and individuals D and E just own 25% of stock in a company. So pretty much everyone is going to have to report in that example. Individual A owns 27.5% of the reporting company through their ownership interests in company Y and company Z. So they meet that test just from the ownership perspective. They also are C, FO and therefore also have substantial control, individual B one 35% of the reporting company through the two other companies and therefore their information must be reported. Individual C is the CEO, CFO, and president of company Z. So they're going to be considered an important decision maker. D and E are the only ones who do not have to have their information reported. Individual F also has substantial control in their role for the reporting company.

There are some people who may be considered beneficial owners who will not have to have their information reported. It's a pretty narrow group of people, any minor child. Instead, the company is allowed to report that minor child to legal guardian's information. Instead, a nominee, intermediary, custodian or agent, if they're acting on behalf of an actual beneficial owner, only the actual beneficial owner is going to be reported. Employees. If they're subject to the will and control of the employer and are not any kind of senior officer, their information will not need to be reported an inheritor. If the individual's only interest is through a future interest in the reporting company through inheritance, technically no information must be reported. We will talk about beneficiaries later on. In terms of trusts though, and any creditors of a reporting company, if their only interest is through a right to payment repayment of a debt, they are not considered a beneficial owner whose information must be reported. So now Jen, I think you are.

Jenn Sklar:Yep, it's me. Here we go. Okay, reporting company information. So you need the full legal name of the company, me any other trade names doing business as the street address of the company's principal place of business. You can't have PO boxes, you can't have third party addresses, no WeWork addresses or anything like that. A foreign company that doesn't have a principal place of business in the US would report the address that they use to conduct their business in the us You have to have the jurisdiction in which the company was created or registered. So the particular state or the foreign country or US possession and then an IRS issued taxpayer identification number. So issues if there's issues with getting a taxpayer identification number for a foreign company. I mean generally I think in this particular case, because it's only going to be foreign companies that are registered to do business in the us, it probably already has a taxpayer identification number or an EIN because it would be likely filing a form 1120 F. So I think that in the cases where you're going to have a foreign reporting company that satisfies the requirement here, they probably are already filing in the US and probably already have an EIN.

Next. I'm hitting the wrong button. Okay, beneficial owner is the full legal name of birth. The residential or business street address, the unique identifier number. So none of this has changed. This has always been the case here. Obviously a beneficial owner is a natural person. The reporting companies are entities. The beneficial owners are people. I might've seen a few questions asking about that. So unique identifier number from a non expired government issued photo id. A foreign passport will be accepted if there's no US issued photo id like a driver's license and then an image of the government issued photo ID needs to be provided as well.

Sarah Adkisson:All right, so for those companies that were formed after January 1st, 2024, they must also report company applicants. They must report at least one but not more than two direct or indirect company applicants. So the direct applicant would be the individual who directly files the document that created or registered the company. An indirect applicant would be the individual who directed that filing. You must provide the same personal information as you provide for a beneficial owner. However, a company applicant's information does not need to be updated. If it changes for company applicants, it's one and done in terms of reporting as opposed to beneficial owners.

We talked about Finsta and identifiers I think earlier on. So you are able to apply for a unique cent identifier on Cent's website. This is both beneficial owners and company applicants. So if people are doing a lot of filing, this may be a good thing for them to do. You have to report the same information when you apply for the FinCEN identifier that you would have reported on A BOI report. You can then give that to a company to report in lieu of your personal information. If any personal information changes, you have to file an update within 30 days of that change. They're not required. These are really an administrative tool for people to use. If they're doing a lot of filing, obviously it's a little faster and easier to use a fin set identifier number than to input all of your personal information over and over and over again. But again, they're not required.

So in terms of filing the report, it must be filed electronically through the FinCEN portal. It is called the beneficial ownership secure system, and I just really love that it forms the acronym of boss. Any updated reports also must be filed electronically. So if any reporting company is unable to file electronically, it must contact FinCEN directly. So this is indirect contrast to a lot of things with the IRS. If you are unable to file electronically, you can file on paper with hardship. That's not really an option here. You must contact FinCEN directly to figure out what you can do.

There are three filing options. One is you can download A PDF. It is a fillable PDF that you can then complete offline on a computer save, and then you can upload it through the SEM portal. You can also use the online form that you fill out directly on the fiend website. You can also use an API and application programming interface, which is a third party filing option. This is not really available via fiend. So the company, the API would have to reach out to fiend to set it up, but that is another option for people to file is to use a third party source. So we're just going to have some key steps here as key takeaways for the BOI reporting. The first step would be to, if you're, who's going to be a beneficial owner. Sorry.

Jeff Kelson:Okay. Yeah, you were breaking up. Sorry,

Sarah Adkisson:You breaking up a little?

Jeff Kelson:Yeah. All right. Well, I just want to, yeah,

Yeah, yeah. I just want to mention one thing. We are getting emails from law firms around the country to our clients, to us on the impact of this case. And we just want to state here that there is some disagreement among even those firms about what's still required and not required and how far this extends. So I will put it out there and we will put it out there that if you want to be safe, file it by the end of the year. And one, you won't have to do it again unless there's been a change. And two, if the case gets reversed, you're already done. And thirdly, if there is this disagreement about how far reaching this case extends, you don't have to worry about it if that's what you care to do. So just don't want to give a airtight no wait because there are some people that rather get done and not have to deal with all the gray areas that this case seems to have provoked. So I mean, as we're even having this discussion, I'm getting communication from law firms either saying don't, or we don't think this exempts the filing for folks outside of that jurisdiction. So we're not practicing law here, so I just want to put that out there so we don't want to be the last word on this. Does that make sense, Jen?

Jenn Sklar:Absolutely.

Jeff Kelson:Okay. Yeah.

Jenn Sklar:Lawyers will always have differing opinions on how to proceed. Oh my god,

Jeff Kelson:Yes, they do. So, we don't want to be in the practice of law here. So if you want to be safe and you want to get this done, go right ahead and file this and then it's off your back. And if the case gets reversed or if an interpretation is different, you're clear, but if you'd rather wait, it seems that that's fine too. So there's a lot of people in your boat. The key steps in BOI reporting is determine if the company is considered. We already went through the 23 exemptions who's a beneficial owner, and that's not just people having at least 25% of the ownership interest. It also includes people having control. That's where the C-suite folks get in the CEO, the CFO, the COO, the general counsel or anyone else that has substantial control. You got to determine if the company applicants are required. If you have many to do.

We found that it's good to apply for a fiend identifier, and that makes doing, let's say you have 60 LLCs you need to report. That makes doing it a lot easier. You don't have to redo a lot of the information. So you can get a fiend identifier, say you own or you have someone that owned or is substantial control. For many, many LLCs, it does make the filing a lot easier and simpler, although you have to apply for defense and identifier first, and then you can motor us through a lot of the filings. By the way, the filings don't take very long, just saying, but if you have a lot of entities, then yes, because then each one would take five, 10 minutes. It adds up. Collect required information from the beneficial owners of the company. Applicants, you report it on the BOI report. And as we said for 2024, you had to do it within 90 days of creation or formation. And if this changes, so we're not saying that the driver's license expired or the passport expired, we don't believe that has to be modified. But if you have someone who came in and as a new 25% owner or has substantial control, you had a change in the CFO, yes, that would require modification and go through those.

So yes, this is not a one and done. If there are changes and yeah, penalties, this is why we're all here. I think besides the lead off about the Texas case is that there's civil penalties for willfully providing false information or failing to report the finest $591 a day. It adds up. Why is it 5 91? It's pegged to inflation. So it started at 500 I believe, and now it's 5 91. But also more willfully failing to report or providing false information. It can be a criminal penalty, a fine up to $10,000 and or up to two years in prison. Now we highlighted or bolded the word willfully because I think if you had 60 LLCs and you filed 58 of them, I don't think that's a willful just putting it out there. But if you didn't file for any of them, so we can't really define willful, but I don't think they're trying to trip up everybody who just missed an applicant or two. But trying to get those who had more nefarious reasons for failing to report or providing false information. So individuals who purposely provide a false information subject to those penalties. And there's no statutory penalty for non will, non willful. So that's to be defined if this really has comes back or the requirement becomes really set in stone. So again, the penalties are heinous, but they're looking really for the willful non-violence.

Jenn Sklar:Just a quick note on that, Jeff. As Jeff said, what does non willful mean? What does willful mean? I mean, I guess the best way to think about it might be because this is Fen, and for those of you who are familiar with the fbar or the FIN one 14 reporting, they use the exact same terminology, willful versus non willful. So if you really wanted to delve into, figure out how that would be defined, could always take a look at fbar cases and get an idea of what that would mean. But it really does mean it really isn't about somebody who just forgot, didn't really understand it, didn't know it's someone who actually affirmatively just doesn't file

Jeff Kelson:Consideration. This is really Sarah's purview. Sarah, you back on.

Sarah Adkisson:Sorry about that.

I live near a military base, so anytime a military airplane applies over, my internet gets disrupted. So trust, we have so many questions about trusts. Even before we started, I saw questions in the chat about trusts. So trust themselves are not usually a reporting company. There may be some limited cases where they're registered with the state and they may be considered a reporting company, but generally they're only going to be impacted if the trust itself holds or controls at least 25 of the reporting company. Trust themselves can be beneficial owners. So instead you kind of look through the trust, if that trust would have been considered a beneficial owner, but for the fact that it's a trust, instead, Vincent has identified three groups of people who may instead be considered the beneficial owner. So a trustee who has the power to alter, amend, or dispose of the trust assets, a beneficiary who is either the sole permissible recipient of income and principle from the trust or a beneficiary who has the right to demand or withdraw the trust assets. Or finally a grantor retains the right to revoke or withdraw the trust assets, which makes sense. So they're basically looking to who controls the reporting company within the trust. But again, to reiterate, a trust cannot be a beneficial owner and typically a trust will not be a reporting company. The trust is going to be kind of almost like a wrapping around the reporting company itself. And you'll look through to those three people, those three groups each other.

Jeff Kelson:We already, we've rarely seen the trust that was required to file for the trust because it's really just trust that is set up by the secretary of state. So like a business trust, which are normal, like life insurance trusts or grantor trusts or anything that's set up by a court is not a reportable company. It's very, very limited in trust being the actual reporting company.

Sarah Adkisson:We just had a good question from somebody. You pick one person or could it be, does it have to be all three? It doesn't have to be all three, but it can be all three. If all three have those rights, then all three of them could be considered a beneficial owner, but you would have to have at least one of them probably who would report. And those circumstances, it's probably either going to be the trustee or the grantor, probably the trustee. We already discussed that Vincent Hurricane relief. So I don’t know if we need to go back over this.

Jeff Kelson:Is that the states, again, most of the certain and Vermont, right? Texas to Florida and Vermont, but a few get missed.

Sarah Adkisson:They hit a lot of states this year. One thing I do want to point out, I don't think we mentioned the relief doesn't apply if the beneficial owners are the ones who are in the designated disaster areas. It's only if the physical business location of the reporting company is in that area. I've had a few people ask me about that. Unfortunately, the beneficial owners living in that area does not immediately grant you the filing relief. Instead, you can reach out to fiend for guidance on how to get filed.

Active companies. We had a couple of people in the chat I know asking about inactive companies. Inactive companies are another exempt entity. You have to meet all of these requirements, not just one or most, you must meet all of them. So you have to been in existence on or before January 1st, 2020 essentially before the CTA was even considered. You cannot be engaged in any active business. You cannot be owned in any way, even partially by any foreign person. You cannot have experienced any changes in ownership within the last 12 month period. You cannot have sent or received any funds greater than a thousand dollars in that same 12 month period. And you cannot hold any kind of type kind or type of assets. And that includes ownership in other companies or entities. So there are absolutely companies that meet this, but it is harder than I think people assume that it would be.

So dissolved companies also one that I've gotten a lot of questions about, mostly because it's not exactly perfectly, I would say so a company that was dissolved before the CTA went into effect will not be required to file if you were dissolved after the CTA went into effect, you're still going to have to file, unfortunately, they must have been completely sent, gave some guidance on exactly what they mean by that. This is typically complete when the company has met all of these, again, not most all, if they've filed the solution paperwork in those jurisdiction that they were created in and they've received written confirmation from the jurisdiction of that dissolution. They've paid all taxes and fees, they are no longer no longer conducting any business and they've completely wound up their affairs. And the example the fin I gives is that they've fully liquidated, they've closed all bank accounts, there's nothing else going on for them. All right, we have,

Jeff Kelson:We're getting a lot of questions on exempt reporting company owned by an exempt entity. Yeah.

Sarah Adkisson:Okay.

Jenn Sklar:Me, I think right,

Sarah Adkisson:To talk about the special reporting rules? Yes.

Jenn Sklar:Yeah. So we chose a couple of the special reporting rules to talk about. First one is the reporting company that's owned by an exempt entity. So in this particular instance, the reporting company has to report the names of all exempt entity owners. So the owners that are exempt entities have to be reported. They're not required to report any information about a beneficial owner whose ownership interests are held solely through an exempt entity. So the reporting company has to report the exempt entity, but it doesn't have to report the individual that owns the exempt entity if that's the only way that they own the reporting company. So I own an exempt entity, a hundred percent exempt entity owns a hundred percent of a reporting company. The exempt entity has to be reported, but I do not have to be reported. The second is, and I know I believe a couple of people asked about the pooled investment vehicle in the chat, I may have seen it.

So if you recall, one of the exceptions to reporting or one of the exempt entities is a pooled investment vehicle. So to qualify as a pooled investment vehicle, it has to be a private fund that's operated or advised by any of the following exempt entities. So a bank, a credit union broker dealer, an investment company, an investment advisor, venture capital fund advisor, those sorts of owners. So that is what a pooled investment vehicle is. Now they're exempt, they don't have to report but a foreign pooled investment vehicle. So it must first be a pooled investment vehicle, as I just defined. If they are qualified as a foreign pooled investment vehicle, then they are not required to report information about beneficial owners or company applicants. If the company was formed under the laws of a foreign jurisdiction, and it would be a reporting company if not for the pooled investment vehicle exemption.

So essentially that's saying you have a foreign entity, the foreign entity is registered to do business in the us, it would be a reporting entity. If it's a pooled investment vehicle, then it would qualify here. So they would not be required to report any beneficial owners or company applicants. The only thing that the entity would have to report would be one individual who exercises the greatest authority over the strategic management of the reporting company. So I think Sarah was talking a little bit about, I think in one of the last slide, she was talking about having one or more people to report. I think it was under the trust when we were talking about the trusts here, you only have to report one individual. So you can have five people that have significant management operations or significant management responsibilities over the company, but you only have to report one individual. So those are the two that we wanted to focus on. So

Jeff Kelson:Special rules if it's owned by a corporation, so when a corporation owns 25% or more of the reporting company, it does not report the corporate entity. But there's two instances where the reporting company may report. The owner companies reporting company may report the names of an exempt entity in lieu of an individual beneficial owner on the controls ownership, interest in the reporting company entirely through its interest in the exempt entity, or if the beneficial owners of the reporting company and the intermediate company of the same individuals reporting company may report to FinCEN identify the full legal name of the intermediate company through which an individual is beneficial. Know these are a little complicated, but Vincent came out actually with questions and answers on that. So that's been only contention we talked about, and we know we're kind of running out of time, so by the way, we've gotten over 373 questions. So we're trying our best, but my goodness, I know.

Anyway, the monitoring is when you don't have to report a minor child, but then they no longer a minor child, then they have to report any changes to the reporting company like they changed the name or registered under a new DBA changes in the beneficial owner. We talked about senior offices since the CEOs, CFOs, COOs, GCs, presidents, there's a change that has to be reported. Please not if the license expired or your passport expired. That's not a reporting, the way we understand it. Change in ownership interests of course, of someone else becomes a 25% owner. The death of a beneficial owner must be reported within 30 days. Any change to the beneficial owner's name, they've undergone a name change.

Also, they talk about an updated photo of the id. So if your passport photo I guess got updated or your driver's license, but not the expiration only applies to a reporting company or beneficial owner, information changes to a company's applicant's information will not trigger an updated filing. And that's I guess what we were trying to get to. Key takeaways besides the obvious one that there's a bit of confusion right now. The case has kind of put a lot of things on hold, but there's some disagreements about how far reaching the case is. So if you want to be safe, want to get it out the way you can file portal is open, must be done electronically through a fiend portal or there's a lot of intermediaries that you can file through that are a little less wonky as fiend and give your updated emails reminding you if there's been any modifications.

Many accounting firms are not completing these reports. They tend to be more in the nature of law. This is not like an F bar foreign bank account where it's administered by the IRS. This is not administered by the IRS. When in doubt if you think it's kind of a gray, I don't know if I have to file or not. Probably better to file just in case. And again, we keep saying you have to track changes in beneficial owners and those are substantial control, like C-Suite folks. The initial deadline again is January 1st, 2025. Again, we know the case and companies form after January 1st, 2025. We only have 30 days to file. Hopefully a lot of attorneys file it when they're doing the documents and has not. FinCEN has not hinted all questions as you can imagine. So as we said, we got 379 questions. We tried to answer as many as we could. Some of them are really in depth questions, but someone actually thanked us. That's nice. This was a last minute. We had to be nimble to address the case and kind of review it and process it. And yeah, we had a question. All names, it must be listed in addition to the 25% ownership individuals. That's correct, yeah. So you might have one entity that might have six or seven beneficial owners or significant control.

Jenn Sklar:I just want to note a theme I saw a lot of people were asking if SEN had any response. I mean, it's only been, hasn't even been 24 hours. But yeah, they haven't said anything. They haven't mentioned anything. What's interesting is that for the Alabama case that we were talking about earlier in that particular instance, FinCEN responded with a notice saying that ruling was very specific to those individuals. So FinCEN responded to that one, but this is different. This is a preliminary injunction, so it's not the same as a ruling.

Jeff Kelson:All right, I think we're out of time, right? Am I? We are, yep. Appreciate your patience. We know we had to kind of ad-lib this one because it changed just came through last night. So I hope you can appreciate that. We try to come up with the best we could with that information.

Jenn Sklar:Yes. And sorry we couldn't answer 387 questions, but

Jeff Kelson:Yeah. 387. That's right. We're

Jenn Sklar:Not that good.

Jeff Kelson:390 now. Yeah.

Jenn Sklar:Thank you. Thank you everyone. Thank you.

_{Transcribed by Rev.com AI}