On October 18, 2024, FinCEN published a final rule in the Federal Register to clarify an exemption under the beneficial ownership information reporting rule that FinCEN published on September 30, 2022. The rule modifies the language exempting certain public utilities from the definition of “reporting company” in the beneficial ownership information reporting rule to more clearly implement the language of the exemption found in the Corporate Transparency Act (CTA).
The CTA requires certain types of domestic and foreign entities, called “reporting companies,” to submit information about “beneficial owners” to FinCEN. The Act exempts twenty-three categories of entities from that definition such as “a public utility that provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.” In the Reporting Rule, FinCEN gave precision to the CTA's public utility exemption by making a reference to the Internal Revenue Code, which defines a regulated public utility for tax purposes. The Reporting Rule states that the exemption applies to any entity that is a regulated public utility that provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.
The CTA's public utility exemption lists four types of public utilities: telecommunications, electricity, natural gas, and water and sewer services. However, there are questions about how this exemption applies to telecommunications providers. This is because the specific reference in the Internal Revenue Code only partially defines a regulated public utility that provides telecommunications services.
FinCEN is amending its regulations, consistent with its June 10, 2024 guidance, to clarify that certain telecommunications services providers are exempt from reporting requirements under the CTA. As amended, the regulation will provide as follows “Public utility. Any entity that is a regulated public utility as defined in 26 U.S.C. 7701(a)(33)(A) or (D) that provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.”
The final rule can be found here.