As we have previously noted, the Corporate Transparency Act (“CTA”) requires any entity that qualifies as a "reporting company" to submit a report disclosing certain beneficial ownership information (“BOI Report”) to the Financial Crimes Enforcement Network (“FinCEN”), a division of the U.S. Department of the Treasury. Because the CTA is fundamentally an anti-money laundering law, it is expected to have an astounding reach: FinCEN estimates over 32 million entities will qualify as reporting companies in the first year alone.1
Under the CTA, a "reporting company" is any entity that (1) meets the definition of a "domestic reporting company" or a "foreign reporting company" and (2) does not qualify for any of the 23 statutory exemptions.2 A "domestic reporting company" is any entity that (a) is a corporation, (b) is an LLC, or (c) was created by the filing of a document with a secretary of state or similar office under the laws of a U.S. state, territory, or Native American tribe.3 A "foreign reporting company" is any entity (1) formed under the laws of a foreign country and (2) registered to do business in any U.S. state, territory, or tribal jurisdiction by the filing of a document with a secretary of state or any similar office.4
Depending on the laws of the applicable jurisdiction, entire categories of entities like sole proprietorships might not be reporting companies—and therefore would not be required to file BOI Reports with FinCEN—because such entities are not established by a government filing. To the extent a jurisdiction does not require foreign entities to make filings to register with the secretary of state’s office, such entities would similarly not be required to file BOI Reports. FinCEN has also confirmed that filings such as those to obtain a “doing business as” (d/b/a) name, an employer identification number, or a professional or occupational license are insufficient to render the applicable entities reporting companies.5
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1 See Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59,498 (Sept. 30, 2022), available at https://www.federalregister.gov/d/2022-21020.
2 See 31 C.F.R. 1010.380(c).
3 See 31 CFR 1010.380(c)(1)(i).
4 See 31 CFR 1010.380(c)(1)(ii).
5 See Beneficial Ownership Information Reporting FAQs (updated January 12, 2024), Question C.6.
