Important Deadlines and Exemptions for Federal Beneficial Ownership Information Reporting Requirements

Important Deadlines and Exemptions for Federal Beneficial Ownership Information Reporting Requirements 

The Financial Crimes Enforcement Network (FinCEN) reporting requirements under the Corporate Transparency Act are fast approaching and require immediate attention from communications providers.

These requirements, which took effect January 1, 2024, are designed to enhance transparency in company ownership and help prevent money laundering, tax fraud, and other financial crimes. Most corporations, limited liability companies, and similar entities must file their initial Beneficial Ownership Information (BOI) reports by January 1, 2025, unless they qualify for specific exemptions.

Important Filing Dates for Compliance

• Existing companies (created before January 1, 2024): January 1, 2025
• Companies created after January 1, 2025: Within 30 calendar days of formation
• Companies created between January 1, 2024, and December 31, 2024: Within 90 calendar days of formation
• Updates to filed information: Within 30 days of any changes

Required Reporting Information

Companies subject to these requirements must file an initial report disclosing certain identification information about the company itself and information about its beneficial owners. Companies must also provide timely updates when said information changes. A beneficial owner is any individual who exercises “substantial control” over the company (including senior officers, individuals with authority to appoint/remove senior officers, or those with substantial decision-making authority) or owns or controls 25% or more of the company’s ownership interests.

Relevant Exemptions for Telecommunications Providers

Communications providers should carefully evaluate their eligibility for several significant exemptions:

Large Operating Company Exemption: This exemption may apply to larger providers who meet ALL of the following criteria:

• Employ more than 20 full-time employees in the U.S.
• Maintain a physical operating presence at an office in the U.S.
• Filed a federal tax return in the previous year demonstrating more than $5 million in gross receipts or sales from U.S. sources

Public Utility Exemption: Communications providers may qualify for this exemption if they meet all of the following criteria:

• Meet the IRS definition of a “regulated public utility” which includes:
  • Companies that provide telecommunications services and whose rates must be approved by a government authority
• Provide telecommunications services within the United States
• Are subject to regulatory supervision and examination by state or federal regulators

Subsidiary Exemption: A key consideration for many rural providers, this exemption applies if:

• The company’s ownership interests are controlled or wholly owned, directly or indirectly, by one or more exempt entities

Tax-Exempt Entity Exemption: Particularly relevant for cooperative structures, this applies to:

• Organizations described in section 501(c) of the Internal Revenue Code, OR
• Entities that maintain active tax-exempt status under section 501(a)

Working with JSI

Penalties for failure to report complete or updated BOI, or the willful or attempt to provide false information, may result in civil or criminal penalties up to $10,000 – or two years imprisonment. As the January 1, 2025, deadline approaches, JSI stands ready to assist clients in navigating these new reporting requirements. Our team of experts can provide comprehensive guidance in determining whether your company qualifies for an exemption and, if not, ensure your BOI report meets all FinCEN requirements.

For assistance with BOI reporting requirements or to discuss your company’s potential exemption status, please get in touch with Brett Hallagan or John Kuykendall. Brett and John can be reached at 301-459-7590.