Economic Impact Payment and Claiming the 2021 Recovery Rebate Credit
Guidance on PPP Loan Forgiveness

FinCEN Issues Proposed Beneficial Ownership Reporting Rules

By David P. Donnelly, CPA-Houston

FinCEN, the Financial Crimes Enforcement Network, is proposing new regulations that will require disclosure of the beneficial ownership of certain newly formed and existing business and other entities. The proposed rules will implement reporting requirements under the Corporate Transparency Act, which was part of the Anti-Money Laundering Act of 2020 that became law Jan. 1, 2021.

Beneficial ownership is described as an individual who exercises substantial control over the company or owns or controls at least 25% of the ownership interest in the company. 

Reports for newly created or registered companies would be due to FinCEN within 14 days of creation or registration. Existing entities would have one year from the effective date of these regulations to report. Any changes in beneficial ownership are required to be reported within 30 days.

Certain entities are not required to report their beneficial owners. Among these are large operating companies and inactive entities. 

Large operating companies are defined as:

  • Entities with more than 20 full-time employees,
  • With more than $5 million in gross receipts reported on their federal income tax return(s), and
  • Which have an operating presence at a physical office in the U.S.

Inactive companies are defined as:

  • Being in existence on or before Jan. 1, 2020,
  • Not engaged in active business,
  • With no ownership or control by a foreign person,
  • Not having or had a change of ownership in the preceding 12 months,
  • Have not sent or received an amount greater than $1,000 in the preceding 12 months, and
  • Does not hold any assets in the U.S. or abroad.

Also, excluded are accounting firms, SEC reporting issuers, government authorities, banks, credit unions, bank holding companies, broker/dealers, securities exchanges or clearing agencies, registered investment companies or advisers, insurance companies, public utilities, tax exempt entities and certain other entities.

Information to be reported will include the full legal name of the beneficial owner, the owner’s date of birth, current residential address and a ”unique identifying number from an acceptable identification document.” It appears that once registered, an individual will be provided with a “FinCEN identifier.” The proposed rules specify that the reporting company provide a scanned copy of the ”acceptable identification document.” At present, there does not seem to be a requirement to provide the tax identification number of the beneficial owner.

The penalty for not reporting or for a person to ”willfully provide or attempt to provide, false or fraudulent beneficial ownership information” is $500 per day; there are also potential criminal penalties.

FinCEN’s notice of proposed rulemaking (NPRM) estimates the cost to prepare these reports at $45 each. CPAs in public practice will no doubt be called upon to prepare these reports for their clients. Given the time required to acquire the appropriate information, compile it, prepare the yet-unissued form(s) and comply with any reasonable document retention requirements, the FinCEN’s estimate of the cost to prepare these reports seems wildly optimistic. 

The NPRM was issued on Dec. 7, 2021, and the comments period closes on Feb. 7, 2022. The enabling legislation required these rules to be in effect by Jan. 1, 2022, so early issuance of the final rules can be expected. 

Federal Register: Beneficial Ownership Information Reporting Requirements

Fact Sheet: Beneficial Ownership Information Reporting Notice of Proposed Rulemaking (NPRM) |

FinCEN Issues Proposed Beneficial Ownership Reporting Rule | BKD, LLP

The Corporate Transparency Act – Preparing for the Federal Database of Beneficial Ownership Information (

AICPA Public Comment Letter to the Financial Crimes Enforcement Network (FinCEN) on the Proposed Rule to Implement the Beneficial Ownership Information Reporting Provisions of the Corporate Transparency Act (Feb. 4, 2022)


Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name is required. Email address will not be displayed with the comment.)