And I see it's the top of the hour. For those of you just joining, welcome to today's webinar, Beneficial Ownership Information Presented by Financial Crimes Enforcement Network, FinCEN. We are glad you're joining us today. My name is Yvette Brooks-Williams, and I am a Senior Stakeholder Liaison with the Internal Revenue Service. And I will be your moderator today for the webinar, which is slated for approximately 60 minutes. Before we begin, if there is anyone in the audience that is with the media, please send an email to the address on the slide. Be sure to include your contact information and the news publication you're with. Our media relations and Stakeholder Liaison staff will assist you and answer any questions you may have. As a reminder, this webinar will be recorded and posted to the IRS Video portal in a few weeks. This portal is located at www.irsvideos.gov. Please note, continuing education credit, or certificates of completion are not offered if you view any version of our webinars after the live broadcast. Again, we hope you won't experience any technology issues, but if you do, this slide shows helpful tips and reminders.

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Before we move along with our session, let me make sure you're in the right place. Today's webinar, Beneficial Ownership Information Presented by Financial Crimes Enforcement Network, FinCEN. This webinar is scheduled for approximately 60 minutes. And with that, I would love to introduce today's speaker. We have Michael Dobson. Michael is a Senior Advisor for Policy at FinCEN, where he is heavily focused on Corporate Transparency Act implementation. He previously worked at large law firms and in a policy position at Treasury's Office of Foreign Assets Control. I'm going to turn it over to Michael to begin the presentation. Mike, the mic is all yours. Perfect, Yvette. Thanks so much for that introduction, and good afternoon, everyone. As Yvette mentioned, I've been heavily focused on helping to implement the Corporate Transparency Act or the CTA at FinCEN. And today, we'll be discussing the act's beneficial ownership reporting requirements. We'll start by covering some of the beneficial ownership information reporting resources that FinCEN has developed and published, and then get into the actual requirements using FinCEN's Small Entity Compliance Guide as a framework. So we'll start with, what is the Corporate Transparency Act? Before we get into the specifics, some of you might want a bit more background on the CTA for context. The CTA was enacted by Congress in 2021 as part of the National Defense Authorization Act, or NDAA. The purpose of the CTA is to make it harder for bad actors to hide behind legal entities by requiring many companies to report their beneficial ownership information to FinCEN. FinCEN being the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. Now, the reporting requirement takes effect on January 1, 2024. This is the central deadline that you'll hear me repeat over and over today, frankly. On that date, many companies in the United States will have to begin reporting information about their beneficial owners and company applicants. We will get into who those individuals are in a moment. To help these companies and affected individuals understand and comply with the requirement, FinCEN developed a beneficial ownership webpage with a variety of resources. One of these is FinCEN beneficial ownership Small Entity Compliance Guide, which provides detailed explanations of key concepts and tools to help when applying those concepts to specific businesses. The guide helps readers answer six core compliance questions. Does my company have to report its beneficial owners? Who is a beneficial owner of my company? Does my company have to report its company applicants? What specific information does my company need to report? When and how should my company file its initial report? And what if there are changes to or inaccuracies in reported information? The rest of this presentation will follow the guide structure to give an overview of key concepts and considerations. We'll start with the foundational question. Does my company have to report its beneficial owners? The CTA requires what it calls reporting companies to submit beneficial ownership information to FinCEN. Reporting companies come in two flavors, domestic and foreign. Qualification for either depends on the filing of a document with a secretary of state. Domestic reporting companies are corporations, limited liability companies, or any other entity created by the filing of a document with a secretary of state or similar office. Foreign reporting companies are entities formed under the law of a foreign country, but registered to do business in the United States by the filing of a document with a secretary of state or similar office. So again, for both domestic and foreign entities, the key question is whether the entity was required to file a document with a secretary of state or similar office to exist or do business in the United States. If so, then it might be a reporting company required to submit beneficial ownership information to FinCEN. I say might be because there are exemptions, 23 to be exact, to the reporting requirement for entities like banks, credit unions, tax-exempt entities, public utilities, and certain large companies. The Small Entity Compliance Guide has tools to help readers figure out if an exemption applies. Okay, so let's say you had to file a document with a secretary of state or similar office to create your domestic entity or to register your foreign entity and you've determined that no exemptions to the CTA reporting requirement apply. Your entity is therefore a reporting company required to report its beneficial ownership information to FinCEN. Your next question might then be; how do I figure out my company's beneficial owners? Well, beneficial ownership can come one or two ways, through ownership or control. A beneficial owner is any individual who either directly or indirectly owns or controls at least 25% of the ownership interests of a reporting company, or exercises substantial control over a reporting company. An individual can of course be a beneficial owner by virtue of ownership interests and substantial control. It's not an either or proposition where having both makes them cancel each other out. Let's start with the ownership interests. Reporting companies are required to report to FinCEN all individuals who own or control at least 25% of the ownership interests of the company. Ownership interests here is fairly broad, encompassing stocks and other equity, a capital or profit interest, convertible instruments, options or privileges, and any other instrument, contract or other mechanism used to establish ownership in a reporting company. Now, I should note there are several exceptions to the definition of beneficial owner, including minor children, nominees, intermediaries, custodians, agents, employees, inheritors, and creditors. Again, I refer you to the Small Entity Compliance Guide, which has checklists and other tools to help with those evaluations. Switching from ownership interest to substantial control, reporting companies are required to report as a beneficial owner, any individual who meets any of four general criteria. The individual is a senior officer; the individual has authority to appoint or remove certain officers or a majority of directors of the reporting company; they are an important decision-maker; or the individual has any other form of substantial control over the reporting company sort of a catch all category. Again, the compliance guide includes helpful information on how to think about this concept. We'll talk about what company applicants are in a moment, but first I want to touch on why the role matters. If a reporting company was created or registered before the effective date of January 1, 2024, then it is not required to report its company applicants, along with its beneficial owners to FinCEN. If it is created on or after January 1, 2024, then it is required to report its company applicants. The creation or registration date therefore dictates whether a reporting company has to report its company applicants to FinCEN. So with that in mind, who are company applicants? This can be a maximum of two people. The first is the individual who directly filed with the secretary of state or similar office the document that created or first registered a domestic or foreign reporting company. The second is the individual who was primarily responsible for directing or controlling the filing of the creation or first registration document. Sometimes these might be the same person as when a business founder does everything herself and sometimes not, as when a senior attorney directs a junior attorney or paralegal to make the creation or registration filing. We now have a basic understanding of reporting companies, beneficial owners, and company applicants. Our next question might be; what information does a reporting company actually need to report? We'll start with basic information about the company itself. Its legal name; any trade names or DBAs it might operate under; its complete U.S. address; the state, tribal, or foreign jurisdiction of formation; and its taxpayer identification number, the TIN, or that's not available, a foreign tax ID. For foreign reporting companies, we'll also need the state or tribal jurisdiction of first registration here in the United States. For beneficial owners and company applicants, the individuals about whom the reporting company will be submitting information, we need to know the following pieces of information; their names, their dates of birth, their addresses, and an identifying number and the issuing jurisdiction from a non-expired driver's license, a passport, or other qualifying identification document. And then, we'll also need an image of the document itself for corroboration. Now, there are instances when instead of reporting the information I just covered about beneficial owners and company applicants, a reporting company can report a FinCEN identifier. A FinCEN identifier is a unique identifying number that FinCEN will issue to individuals and reporting companies upon request after receiving from the requester the information I just covered. For perhaps obvious reasons, individuals and reporting companies will be limited to one FinCEN identifier apiece. FinCEN identifiers will not be available until January 1, 2024, when the reporting requirement takes effect. That January 1, 2024 date, the date on which FinCEN will begin accepting beneficial ownership information reports. As I mentioned, those reports are required of all non-exempt reporting companies, domestic and foreign. Reporting companies created or registered to do business in the United States before that effective date owe their initial beneficial ownership information reports to FinCEN by January 1, 2025. That's one full year after the effective date. Those created or registered to do business in the United States after the effective date, so after January 1, 2024, must submit their initial reports to FinCEN within 30 calendar days of receiving actual or public notice that the entity's creation or registration is effective. Now, I'll note here that on September 28, FinCEN published in the Federal Register, a notice of proposed rulemaking that would extend this 30-day deadline to 90 days. This longer timeframe will give reporting companies created or registered to do business in 2024 additional time to understand and comply with the reporting obligations. While I am not able to take any questions on this proposal since we are in an open comment period, FinCEN welcomes written comments until October 30, 2023. Again, that proposal is available for review on the Federal Register website. Now, if a reporting company is required to file a beneficial ownership information report, the only way to do it will be electronically through a secure filing system that FinCEN is developing. That system will not be available until the magic date. You guessed it, that is January 1, 2024. FinCEN will not accept any beneficial ownership information reports before that date, and you won't be able to submit one until then anyway because there will not be an online system to accept it. FinCEN will publish instructions and other technical guidance before that date, and you can sign up at our website to receive updates or periodically check the website for the latest news. Alright, so your reporting company filed its initial report, but something changes that makes the information submitted to FinCEN outdated maybe a beneficial owner sold all their shares or the company moved across town. What do you do? Update the report and do it within 30 days after the change occurs. 30 days is also the deadline for correcting inaccuracies in beneficial ownership information reports. That's 30 days after the reporting company becomes aware or has reason to know of an inaccuracy. So if you print a copy of the beneficial ownership report, you file with FinCEN and realize you left out a beneficial owner, you have 30 days to correct that report by adding the missing individual. That's just for example. The question comes up, what if my company doesn't report BOI in the required timeframe? FinCEN understands that this is a new requirement and we're working hard to raise awareness about it and help reporting companies comply. We also understand that new requirements take time to get used to, so if a reporting company makes a mistake in a report, but corrects it within 90 days of the deadline for the original report being due, the company may avoid penalties. Disregarding the beneficial ownership information obligation can of course carry significant civil and criminal penalties. But, again, we are doing our best to ensure that everyone understands their obligations under the reporting rule to minimize confusion about how to comply. Some of the resources we made available on that front are the Small Entity Compliance Guide that provided the framework for this discussion, frequently asked questions based on inquiries that have already started trickling in, other small business resources, introductory videos, and quick reference materials. All available at FinCEN's dedicated beneficial ownership information webpage. You can also contact FinCEN with questions if you don't see them answered on the website. For that, you can go to www.fincen.gov/contact. You can also email us at FRC@fincen.gov or call the 1-800 number there on the slide. That concludes my presentation. If you have any questions for me, please feel free to submit them and I will now return control to Yvette. Thank you, Michael. Hello, again, it's me, Yvette Brooks-Williams, and I'll be moderating the Q&A session. But before we start the Q&A session, I want to thank everyone for attending today's presentation, Beneficial Ownership Information Presented by Financial Crimes Enforcement Network, FinCEN. Earlier, I mentioned that we wanted to know what questions you have for our presenter. So here's your opportunity. If you haven't input your questions, there's still time. So go ahead and click on the drop down arrow next to Ask Question field. Type in your question and click Send. Michael is going to stay on with us to answer your questions. And one thing before we start, we may not have time to answer all of the questions submitted, but we will answer as many as time allows. So let's get started so we can get to as many of those questions as possible. So let me see here, what do we have in the way of questions today? Oh, here's one, here's our first question, Michael. January 1st is rapidly approaching and there have been reports that FinCEN may delay the effective date of the BOI rule.

Is there anything you can say about this, Michael? Sure, this one actually has been coming up a fair bit. I can say that FinCEN's first priority is to implement the beneficial ownership information requirements. We've set the deadline of January 1, 2024, as I've said 15 times so far, for the reporting rule to be effective. And I can assure everyone that we're dedicating substantial resources toward making that possible. We know how important it is to get CTA implementation right. And that BOI, Beneficial Ownership Information will be critical to supporting Law Enforcement and National Security Efforts. We're continuing to focus on five key implementation areas. Putting in place the rules that implement the requirements of the CTA, including the reporting rule, the access rule that we are continuing to work on, and the upcoming CDD rule, revisions, building the IT framework that I mentioned, conducting outreach like this event today, developing guidance to help everyone navigate the new requirements, and then developing the administrative infrastructure to make all of this hang together. Obviously, quite a bit of effort there, and we're doing our best to make it all happen by that effective date. Thank you, Michael. Here's another question that's interesting. Will there be a fee for submitting a beneficial ownership information report to FinCEN? Good question, and the answer is no. There will not be a fee for submitting beneficial ownership reports to FinCEN. No charge. Oh, good to know.

Good to know. Let's see. We have another question here. Oh, okay. The Small Entity Compliance Guide is about 50 pages. Does FinCEN expect small businesses to read this entire document to understand its reporting obligations? And a follow-up to that question is, what if I have additional questions that are not addressed by the guide? Fair question. Did we really assign you a bunch of homework that you have to do in order to comply? The guide is supposed to be helpful.

It provides explanations, examples, tools to help understand the reporting requirements. Small businesses in particular might find it particularly helpful, but you don't have to read the guide to comply. The rule and regulations, and you can of course just go and read that directly and you should. But the guide is meant to be a help as is everything else on FinCEN site, that's fincen.gov/boi. And then if you still can't find what you're looking for as I said you can contact us with the 800 number I mentioned or fincen.gov/contact. Good to know. Can a parent company file a single BOI report on behalf of its subsidiaries? Good question. That is a no. Any company that meets the definition of a reporting company and does not qualify for an exemption has to file its own BOI report. Okay. This is a good question, too. What should a reporting company do if they cannot obtain required information on a company applicant or beneficial owner? That is a good question, and it's come up a fair bit. So, as I said, starting on January 1, 2024, the obligation to report kicks in, right, that is the effective date. I would recommend that if you already are a reporting company, right, if the company already exists, you should start engaging with beneficial owners to make them aware of the requirement, get them comfortable, obtain their information, and revise or consider putting in place contractual agreements and language to ensure that the beneficial owners will keep the company apprised of any changes. And then, if you're setting up entities, right, if the entities don't exist yet, I would recommend reporting companies or people considering setting them up to take steps to ensure that you have access to the information that will need to be filed and mechanisms in place to ensure, again, that information is kept up to date. Okay. Thank you for that, Michael. Let's see what else we have here. Oh, here's a good one.

Why is FinCEN extending the filing period for initial reports from 30 days to 90 days for entities created or registered in 2024? Sure. As I said, I can't get too much into that, because it is an open comment period. But we said in that notice of proposed rulemaking, that NPRM that after extensive engagement, we think an extension of the deadline will give reporting companies additional time to understand the obligations, which will help with compliance. It's a new rule, so we understand that some companies might need more than 30 days to get the information they need to comply. And then just more time to help resolve questions that might arise. We understand that compliance with new rules can be tricky, and we don't want to play a game of gotcha with anyone.

But again, and frankly, to help us manage what we expect to be a significant volume of reports as well and to give folks time to get acquainted with the resources that I mentioned on our website.

Thank you. I just want to take a quick break from our Q&A to inform the participants that the handout is under the Materials tab. Our apologies, it was added a little bit late, but it's there for you now if you were looking for it. All right, Michael, let's see if we have any more questions. Oh, yes. Do individuals need to update or correct information they submitted to obtain a FinCEN identifier? Absolutely. Just like the reporting company has to update information, individuals who obtain FinCEN identifiers must do the same. They must report any changes to the information. They submitted no later than 30 days after the date on which a change occurred, and if there are any inaccuracies, they have to fix that again within 30 days after they become aware of the inaccuracy or have reason to know about it. Reporting companies with a FinCEN identifier must update or correct the company's information by filing an updated or corrected report as appropriate. Michael, can a third-party service provider submit beneficial ownership information on behalf of a reporting company? Yes. Reporting companies may use third-parties, third-party service providers to help them and to submit their beneficial ownership information reports. We're actually working on giving third-party service providers the ability to submit those reports via an e-filing system or an API, an Application Programming Interface. I think that's what API stands for. And we'll be putting out technical specifications for that later. Now, Michael, would you mind, could you go over some of the exemptions of reporting companies can claim to avoid filing reports? I remember you were saying something about that during your presentation. Yeah, I can go over the list of exemptions. There are 23 of them, so I don't want to go into deep detail on any particular one. We could be here all afternoon and I didn't budget time for that. I know others probably didn't either, but I can go through the exemptions. So Securities reporting issuers are exempt; Governmental authorities; Banks; Credit unions; Depository institution holding companies; Money service businesses, MSBs; Brokers or dealers in securities; Securities exchange or clearing agencies; Other Exchange Act registered entities; Investment companies or advisers; Venture capital fund advisers; Insurance companies; State-licensed insurance producers; Commodity Exchange Act registered entities; Accounting firms; Public utilities; Financial market utilities; Pooled investment vehicles; Tax-exempt entities, I'm reading this from a list, we passed tax-exempt entities; Entities assisting tax-exempt entities; Large operating companies; Subsidiaries of certain exempt entities; and Inactive entities. Like I said, that's the list. I don't want to deep dive too much into any particular one, because those can be whole sessions to themselves, but that is the list. And of course, as I said, you can check the Small Entity Compliance Guide. You can read the rule itself and we have other resources available on the website about those. Okay. Thank you, Michael. Once we submit this information, who will have access to it? That's a great question. That is the subject of the access rule, which is currently occupying much of my time. In broad strokes, the CTA authorizes FinCEN to disclose beneficial ownership to federal, state, local and tribal officials, government officials as well as certain foreign officials, but they have to go through U.S. federal government agencies. Foreign governments cannot directly obtain beneficial ownership information from FinCEN. Federal agencies that are engaged in national security intelligence, and law enforcement activities will have access as will state, local, and tribal law enforcement agencies. Financial institutions will also have access to the information in certain circumstances, but they'll need the consent of the reporting company to obtain a reporting company's information. And the financial institutions, regulators will also have access to the information that is obtained by financial institutions they supervise. So the two of them are kind of coupled together. As I mentioned, we at FinCEN are currently developing the rules that will govern that access and the handling of beneficial ownership information. And we're going to work closely with those parties to ensure that they understand their roles, the responsibilities, and to just make sure that everybody's doing their part to keep this information secure and confidential, because we do understand that it's sensitive. Yes, sensitive it is. Where will FinCEN's store beneficial ownership information? Okay.

So this is kind of part and parcel question. So the information is going to be in a secure non-public database. If anyone is familiar with FISMA, it's going to be a FISMA High standard.

Very rigorous information security methods and controls, basically the highest level typically used to protect non-classified sensitive information systems within the government. Okay. Thank you, Michael. Yeah, here's another question. What are examples of important decisions that can indicate someone exercises substantial control? That's good. I'm going to flip to it, we actually have an infographic in the Small Entity Compliance Guide that I keep mentioning here that kind of talks about this a little bit. I mean, obviously, these are just examples, and not dispositive.

But typically, right, it's going to be the important decision makers in a company. So if it's the person, who's sort of deciding the nature and scope of the business, right, they're deciding what business lines or ventures to bring on or to cut off, geographic focus, entering or terminating sort of significant contracts, I think about kind of the business type choices as well. If they're the ones who decide about selling or leasing or buying sort of big principle assets, making significant expenditures or investments, issuing debt obviously, issuing equity, sort of big compensation schemes and incentive programs for senior officers. If you're the person deciding that, chances are you have substantial control and sort of structural issues, right? We need to get rid of this subsidiary, we need to merge these two entities. And then if you are the one who's kind of in charge or if you have significant authority in terms of substantial governance documents, right, being able to change the articles of incorporation, bylaws and such. Again, those aren't dispositive, but there are examples of the kinds of things that you could be looking to as decisions of substantial control. So with that said, can a reporting company's lawyer be considered as a beneficial owner? Good question. I would see lawyers in here given this forum, I'll also put accountants in this bucket too. Lawyers and accountants generally aren't going to qualify as beneficial owners, probably in typical cases I wouldn't think, but again it can depend on the kind of work being performed, right? If it's just a general legal or accounting service, relationship, arm's-length, general third-party professional, then you're probably not going to be considered a beneficial owner. And then in cases that might be on the line or get there's some questions, as I said, there are also sort of exemptions for nominees, intermediaries, agents, things like that that are worth looking into. Again, covered in the Small Entity Compliance Guide, but with that said, if an individual for example holds a position of general counsel or is otherwise sort of a senior officer of the company, then they would be a beneficial owner. But again, I would consult the Small Entity Compliance Guide in addition to the rule itself, because there's actually a checklist there about qualifying for exceptions to the definition of beneficial owner. Thank you for that information. Let's see what else we have here, Michael. Lots of questions today. What can banks and other covered financial institutions expect in terms of timing and conforming changes to the CDD rule? Here I thought we were going to get away with no CDD questions, jump in the gun on us a little bit. So for those who might not be aware, the CTA requires that FinCEN revise our CDD rule, no later than one year after the effective date that the reporting rule takes effect. So by January 1, 2025, we're working on that. We're working on these revisions, thinking them through as part of our ongoing implementation work, and we'll obviously issue a notice of proposed rulemaking when the time is right, and we will welcome public comments on that then. All right. So does the reporting deadline extension NPRM delay the effective date of the final reporting rule? That is almost funny, because no, the date remains January 1, 2024. Yeah, I will emphasize that date. I feel like I've emphasized it too much already, but I will just say one more time, January 1, 2024 remains the effective date. They tried. We have a few other questions here. Let's see. If you have a manager of a company and another person is partner with more than 25%, you have to submit the information of both or only the manager? That's good. So for the person with 25% of the ownership interest, they're going to be a beneficial owner by default. The manager of the company that will depend on if that person exercises substantial control, right?

If, are they a manager or are they the manager? Because when I hear, a manager of a company, this puts me in the mind of someone who does exercise substantial control, but it will depend there.

But if the manager exercises substantial control, then yes, they could be a beneficial owner in addition to the person with 25% or more of the ownership interests. Okay. Thank you. Here's another question. Who will be able to file the BOI reports on behalf of their clients? Like can CPAs and EAs file these or will only lawyers be able to file these reports? So we have not imposed any lawyers only type restrictions on which third-party service providers can submit reports on behalf of reporting companies. Okay. Thank you. Here's another question. Is this a one-time filing or do entities have to file annually? Great question. This is a good question. There is no annual requirement after the initial filing. Reporting companies have to update their reports if things change or if they find an inaccuracy in the report, but there is no annual requirement. Okay. So, one and done? Unless something changes for you. All right. When do you expect to issue forms to report BOI? Definitely before that effective date of January 1, 2024. Okay. Here's another question. Where is important decision maker defined? So in the rule itself under substantial control, right? Because the key criterion is not, is the person an important decision maker, it's do they exercise substantial control. And important decision maker is just sort of a guiding principle, it's not a defined term per se. So, again, if you look in the rule itself and in the Small Entity Compliance Guide, there are illustrative concepts and sort of examples to help you think through who those people might be within an organization. Okay. Is a pre-2024 entity need to report by 12/31/2024? So the deadline is January 1, 2025, right? So presumably you would need to do it by, 11:59 PM, December 31, 2024. Okay, perfect. Let's see here, for reporting the address of a company, does it have to be a street address? So I'm not sure what the, does it have to be a street address, I guess as opposed to Maybe opposed to a PO box? Like a PO box, yeah. So it has to be their primary place of business. It cannot be, for example, a PO box, assuming that that's what that question is kind of getting at. Okay. So here's another question. Oh, this is a good question though. So any entity created prior to January 1, 2024 does not need to register. So I think some clarification is needed there for this person. Absolutely. So any entity created prior to January 1, 2024, does need to report. It's just that they don't need to report until 1-year after the effective date. So you have to report by January 1, 2025. That is the deadline for a pre-January 1, 2024 entity to file its initial beneficial ownership information report. Thank you for that clarification. To be clear, if business was formed, this is kind of the same as the previous question, but I'll ask it anyway. To be clear, if business was formed before 1/1/2024, there is no filing requirement, correct? So I guess you could just re-emphasize your answer. Yeah, they will need to report. So any business, even if you were created before January 1, 2024, you will still need to file your initial beneficial ownership information report. It's just that you have until the deadline of January 1, 2025 to get that in. So this is a really good question. When a driver's license or passport expires of the beneficial owner, will the business need to report that change? Yes, so that is a change that needs to be reported. And that's why earlier I suggested that reporting companies start getting their beneficial owners accustomed to the idea of keeping the company in the loop on changes like that, because ultimately the reporting company is on the hook for making sure its reports are up to date with FinCEN. So we want to make sure that the beneficial owner and the company are on the same page about honoring that compliance obligation. That was a good question. Thank you. Let's see, who will be sending the actual or public notice to comply with the initial report filing requirements? Who is that going to come from? So the public notice question, this is one of those issues that kind of depends on the state, right? In some cases, a state, secretary of state or comparable office will send a letter to a company, saying, your company is formed or registered like it'll be a specific sort of thing.

And other cases from what we understand at FinCEN, the secretary of state will just sort of publish these on a website or put it up in a public notice. And those are going to be sort of the two cases that we're most familiar with, right? It's going to be when you either new, because the secretary of state or the comparable agencies sort of sent you the notice or when the notice became public, if that's sort of standard practice. Okay. So what if a new beneficial owner is added to the entity after the initial incorporation? When must this information be reported? So this is one of those changes that it needs to happen within. There needs to be an update within 30 days of the change occurring, right? So when that person becomes a beneficial owner, the company needs to update their beneficial ownership information with FinCEN to reflect the addition of that individual within 30 days. Okay. Another question is, how is the government going to reach out to business? So we're conducting outreach efforts like this. We're doing quite a few of these. And then the FinCEN website, as I said, we've been publishing FAQs, the Small Entity Compliance Guide videos, other materials. We're in touch with sort of state level government agencies, trade associations, secretaries of state, right. We are using multiple avenues to try to get the word out. And then we're, of course, hopeful that outreach sessions like this, folks on the call will go out and sort of spread the word to businesses and beneficial owners in their networks. Good job. What about inactive LLCs? Are they still required to file? They're assuming no exemptions apply, right. Again, that's always the caveat here that exemptions can apply. But if an entity exists, and it just hasn't really been put to use, those same deadlines that I talked about before are going to apply. Okay. Will this company information be public? Yeah. So, if you follow sort of what's going on in the international space, there's quite a bit of contention right now about public beneficial ownership databases versus private. This is going to be, this is not a public beneficial ownership registry, right. The only parties that will have lawful access to it are the ones I mentioned earlier, the government agencies, directly financial institutions, directly with consent of reporting companies, and then indirectly those foreign governments. This will not be something that, Joe Public can just go online and start digging around in. Well, that's good to know. Does a sole proprietorship have to file this form as well, have to register? So the key criterion, again, of whether or not an entity is a reporting company, is whether it was required to file a document for its creation in the United States, if it is a domestic company, or if it's a foreign company, if it had to file a document with a secretary of state or a comparable entity to register to do business in the U.S. Our understanding is that in many, if not most, if not all states, sole proprietorships typically do not have to file anything with the secretary of state in order to be created or to do business if they're foreign. So, that key criterion is going to be what dictates. So it depends on if in the state of creation, sole proprietorships have to register anything with the secretary of state to exist. Thank you. All right. So companies registered prior to January 1, 2024 have until January 1, 2025 to report their BOIs, is that correct? That's correct.

Okay. And is this an annual filing, I think you've already addressed that, if you want to just reiterate? Sure. This is not an annual filing. Once you do your initial filing, the requirement is that you provide any updates to the information if anything changes or correct any inaccuracies, but it is not a periodic filing of any sort. And what is the image requirement exactly? So if you, for example, comply with the beneficial ownership information, if you choose to use a passport, right, you provide us with a passport number, you also have to provide essentially a picture of that passport, right. So, obviously not the blue cover if you're an American, but the sheet with your picture or with the beneficial owner's picture, and other identifying information. When do you plan to release the form? So that will be, again, we're going to try, we're definitely working to get that out before the effective date of January 1, 2024. Okay, let's see what else do we have here. Why is this being required of small businesses and large ones get a pass? That is a great question for elected members of Congress. This is the requirement. Typically, if you look at the exemption list, most, if not all of the entities there or entities about whom, it is easy to find their beneficial owners. It is easy to find information about their beneficial owners because they're, for example, publicly traded or they have to provide a list of their owners to SEC or one of the other regulators, or there's some other mechanism in place that allows law enforcement to obtain a list of their beneficial owners. Generally, the companies that are not exempt our companies about which it is otherwise beneficial ownership information is really only available at the state level, at the sub-federal level, right, state or tribal, and even then not necessarily always, because there are states with rules about allowing nominees or others to sort of stand in the shoes of a real beneficial owner. So, this law is primarily aimed at helping to pierce the corporate veil on those types of entities, right, the entities for which it might otherwise be impossible to identify the beneficial owners. And the exemptions just reflect that imposing a duplicative requirement on those entities that already make their information available would be redundant and unduly burdensome. Okay, I think we just have time for one more question. This is going to be the last question. Why would a reporting company need a FinCEN identifier? That's great. A reporting company wouldn't necessarily need one, but in some cases it might simply be easier to be able to just have a single number to use and to pass around as needed among third-party service providers, for example, or when dealing with FinCEN. It could just be easier to use instead of having to, go through the process of sharing all of the information that I mentioned earlier. Okay. Thank you, Michael. Audience, this has been a great Q&A, but that is all the time we have for questions today. I want to thank our presenter, Michael, for sharing his knowledge and expertise and for answering your questions. Before we close the Q&A session, Michael, can you share some key points you want the attendees to remember from today's webinar?

Absolutely. Well, the first, which I think I hammered home at this point, or at least I hope, is the beneficial ownership reporting requirements become effective on January 1, 2024. Many businesses will have reporting requirements, so business owners and operators should take a close look at what that entails. Now, starting with FinCEN's website, as I mentioned. With January 1 right around the corner, I recommend doing that sooner than later. I think that covers it, so I will send it back to you, Yvette. Thanks again Michael. Audience, we are planning additional webinars throughout the year. To register for an upcoming webinar, please visit IRS.gov keyword search webinars and select the Webinars for Tax Practitioners or Webinars for Small Businesses.

When appropriate, we will be offering certificates and CE credit for upcoming webinars. We invite you to visit our video portal at www.irsvideos.gov. There you can view archived versions of our webinars. And, again, continuing education credits or certificates of completion are not offered if you view an archived version of any of our webinars on the IRS Video portal. Another big thank you to Michael for a great webinar and for sharing his expertise. And I also want to thank you, our attendees, for attending today's webinar, Beneficial Ownership Information Presented by FinCEN. Now, we would appreciate it if you would take just a few minutes to complete a short evaluation before you exit. If you'd like to have more sessions like this one, let us know. If you have thoughts on how we can make them better, please let us know that as well. If you have any requests for future webinar topics or pertinent information you'd like to see in an IRS Fact Sheet, a Tax Tip, or an FAQ on IRS.gov, then please include your suggestions in the comments section of the survey. Click the Survey button on the right side of your screen to begin. If it doesn't come up, check to make sure you have disabled your pop-up blocker. It has been an absolute pleasure to be here with you and on behalf of the Internal Revenue Service and our presenter, we would like to thank you for attending today's webinar. It's important for the IRS to stay connected with the tax professional community, individual taxpayers, industry associations, along with federal, state, and local government organizations. You really do make our job a lot easier by sharing the information that allows for proper tax reporting. So thank you again for your time and your attendance, and we wish you much success in your business or practice. You may exit the webinar at this time.