In 2021, the Corporate Transparency Act was enacted into U.S. federal law as part of a multinational effort to rein in the use of entities to mask illegal activity, including proposed rules (effective January 1, 2024) requiring certain types of entities to file a report identifying the entity’s beneficial owners as well as the natural persons who formed the entity unless an exemption applies. The Reporting Rule exempts “large operating companies,” among other categories, from the reporting requirements. This article reviews the requirements to qualify as a large operating company and identifies some of the open questions relating to those criteria, which includes a requirement that the entity filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales (net of returns and allowances).
