FinCEN Corporate Transparency Act – Ownership Reporting

No information shared in this document should be considered legal advice. It is offered for general reference. Any final decisions should be made after consulting your legal counsel.

Purpose of the Act: The act requires Corporations operating in the US to identify the owners or those with significant stake in a company to the federal government. This aims to reduce the occurrence of illicit shell companies used to launder money from criminal activity.

Domestic Reporting Companies are corporations, limited liability companies, and any other entities created by filing documents with a secretary of state or any similar office in the US.

Dealerships may fall under this definition, unless they meet the criteria of an exempt organization, and therefore are required to report.

Any entity formed after January 1, 2024, has 90 days from their start date to report under this act. Entities formed prior to January 1, 2024, have until January 1, 2025 to report.

FAQs and full understanding of who must report and when can be found here.

Exemptions:

This table summarizes the 23 exempt types of business entities:

Dealerships do not directly fall under an exempted business type in our interpretation, however, we believe that a dealership may qualify under exemption #21, Large Operating Company. The FinCEN Small Business Compliance Guide identifies 6 criteria to qualify for exemption under this category. All 6 are required for the exemption. This includes having 20 or more full-time employees, those employees are employed in the US, the business has a physical presence in the US, and filed a Federal income tax return from the previous year demonstrating more than $5,000,000 in gross receipts excluding any foreign sales. Be sure to consult with your legal counsel before deciding not to report.

We strongly recommend you review the compliance guide linked above to determine your requirement to report.  You can access the FinCEN reporting site here.