Beneficial Ownership Reporting

[nytcpa2012]

Is there a threshold for very small LLC's and corporations to avoid having to file this report? Seems like quite a burden on very small entities, and looks like a lot that should be reporting are exempt!

[IRonMaN · Accepted solution]

Size doesn’t matter

[nytcpa2012]

LOL

[sjrcpa]

Actually it does. If your revenue is over $5 million (I think), you're exempt.

[IRonMaN]

But since we were talking about being too small I didn't go the too big route.

[Just-Lisa-Now-]

Ive seen lots of tax pros in other groups saying it was quick and painless to do, Im not sure its going to be as much of a burden for people as it sounds.  

[sjrcpa]

@Just-Lisa-Now- I think it depends on the ownership. If you and I own an LLC it's easy.

If there is a tiered LLC, it may be hard to determine who the owners are and get the required info, etc. And that determination could be UPL. Sometimes that's why they're tiered - to mask the true ownership.

[BobKamman]

L. 2. What are the criteria for the inactive entity exemption from the beneficial ownership information reporting requirement?

An entity qualifies for the inactive entity exemption if all six of the following criteria apply:

(1) The entity was in existence on or before January 1, 2020.

(2) The entity is not engaged in active business.

(3) The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially. “Foreign person” means a person who is not a United States person. A United States person is defined in section 7701(a)(30) of the Internal Revenue Code of 1986 as a citizen or resident of the United States, domestic partnership and corporation, and other estates and trusts.

(4) The entity has not experienced any change in ownership in the preceding twelve-month period.

(5) The entity has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding twelve-month period.

(6) The entity does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity.

[nytcpa2012]

hence, why this information is being required in the first place; it just seems like there are a LOT of entities in the exempt group that would be able to mask their ownership as well. Do those types that are exempt report this information in some other way that is already shared with the Dept of the Treasury?

[Just-Lisa-Now-]

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@sjrcpa wrote:

@Just-Lisa-Now- I think it depends on the ownership. If you and I own an LLC it's easy.

If there is a tiered LLC, it may be hard to determine who the owners are and get the required info, etc. And that determination could be UPL. Sometimes that's why they're tiered - to mask the true ownership.

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Ahh, ok, I hadnt considered that.  And yes, thats probably the purpose for this all along, to see who's actually hiding in all these tiered companies and the little people got caught up in the hullabaloo.