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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules the responses to the other questions because they did not relate to the number of entities.
2. FinCEN then considered which data to total in order to estimate the: 1
Total number of existing entities; and 2 total number of new entities within a year.
a. FinCEN totaled the numbers reported for Q3 Corporations and Professional Corporations, Q4
Nonprofit Corporations, Q5 limited liability companies, and Q6
Partnerships for each state in order to estimate the existing entities as of 2018.
FinCEN did not total the responses to Q7Q10, which are registered companies, because FinCEN assumes
that those registered entities are foreign to the state in question.217 As noted above, the counts for Q6 may include general partnerships for some jurisdictions which may not be considered reporting companies;
however, because they are grouped with limited partnerships and limited liability partnerships in this survey, FinCEN is retaining this number as part of its estimate.
b. FinCEN totaled the numbers reported for Q11Q14data that mirrors the categories from Q3Q6for each state in order to estimate the new entities created in one year 2018. One of the survey respondents, Wyoming, did not provide responses to these
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questions. FinCEN did not total the responses to Q15Q18, which relate to new foreign entity types, because FinCEN understands that foreign entities counted here could be entities formed in another state. Therefore, there could be double-counting across states if an entity is formed in one state and registered in others.
3. FinCEN next created a table listing each state, the population reported by each state in response to Q2,218 the totals for Q3Q6 total entities, and totals for Q11Q14 new entities.
FinCEN then calculated a per capita rate of total entities and a per capita rate of new entities by dividing the population by these totals; see Table 1.

TABLE 1DOMESTIC ENTITIES PER CAPITA ANALYSIS
State
Population
jspears on DSK121TN23PROD with PROPOSALS4

Colorado
Delaware
Hawaii
Illinois
Indiana
Louisiana
Massachusetts
Michigan
North Carolina
Ohio
Oregon
Texas
Wisconsin
Wyoming

Total entities
5,761,252
967,171
1,420,000
12,770,000
6,700,000
4,680,000
6,902,000
9,995,915
10,350,000
11,730,719
4,191,000
29,100,000
5,795,000
568,125

641,174
1,372,130
120,779
802,880
406,408
423,755
351,363
831,973
647,632
838,850
1,319,082
1,761,695
419,644
155,010

New entities 112,165
213,697
14,626
98,303
51,135
52,389
41,029
100,550
88,052
89,495
110,694
236,505
43,495

Per capita total entities 0.11129074
1.418704655
0.085055634
0.062872357
0.06065791
0.09054594
0.050907418
0.0832313
0.06257314
0.071508831
0.314741589
0.060539347
0.07241484
0.272844884

Per capita new entities 0.019468859
0.220950587
0.0103
0.007697964
0.00763209
0.011194231
0.005944509
0.010059109
0.00850744
0.007629096
0.026412312
0.00812732
0.007505608

4. FinCEN then calculated a weighted average weighted by population for both per capita estimates to find a weighted average per capita rate for the United States.
a. The weighted average per capita rate for total companies is: 0.090978702.
b. The weighted average per capita rate for new companies is:
0.011345597.219
5. Finally, FinCEN estimated the total companies and new companies per year
by multiplying the per capita rates by the U.S. population as of 2021: 220
a. Total entities estimate:
30,247,071.10.
b. Total new entities per year estimate: 3,771,993.58.
While the IACA data provides a window into the total number of domestic entities, FinCEN turned to other sources to identify possible estimates for the number of foreign non-U.S. entities that are registered to do business in the United States, and
therefore would be a reporting company for purposes of the proposed rule.221
FinCEN is proposing the following estimate based on tax filing data, although FinCEN acknowledges that this data may not exactly match the definition of foreign reporting company in the proposed rule. In 2018
there were approximately 22,000
partnership tax returns filed by foreign partnerships.222 Using the same scaling process as noted above, the estimate for
Corporations; Q17 Total number of new Foreign Limited Liability Companies; Q18 Total number of new Foreign Partnerships GPs, LPs, LLPs, etc.
. . ..
217 The prior year of the IACA survey 2017
worded questions differently than the 2018 survey.
For example, the 2017 survey included the total number of domestic and foreign for-profit corporations and professional corporations on file in good standing or active as Q6. FinCEN
assumes that this question covers the same entities as Q3 total number of Corporations and Professional Corporations and Q7 total number of registered Corporations and Professional Corporations in the 2018 survey. Given this, FinCEN assumes that the number of registered entities in the 2018 survey aligns with foreign entities. FinCEN understands foreign in this context to mean outside of the jurisdiction, but potentially still within the United States. In order to avoid
double-counting the same entity across multiple states, FinCEN is not including registered entities in its analysis. At least one state in the 2018 survey, Illinois, specified that their numbers in response to Q3 included domestic and foreign companies.
However, FinCEN is retaining Illinois in its analysis for consistency. Illinois per capita average is lower than the weighted per capita average, which alleviates any concern that it would create a significant upward bias in the nationwide weighted average see Table 1.
218 Wisconsin specified that its population estimate was from 2017.
219 Wyoming is excluded from this calculation since it did not provide statistics on new companies.
220 FinCEN assumes that there is proportional growth between the population and formation of new entities over time for purposes of estimating the total number of existing and registered entities
as of today. Although this assumption is arguably in tension with the assumption of zero net company formation in subsequent years, neither assumptions plays a significant role in estimation of total costs over the time period analyzed.
221 Although some of the IACA questions referenced foreign entities, as noted above FinCEN understands that those numbers may include entities formed in another state and entities formed in another country. FinCEN is only interested in the latter number for these purposes, which cannot be derived from IACA data in the same way that FinCEN derived the number of entities formed in each state.
222 FinCEN understands that, in the vast majority of cases, foreign partnerships file a U.S. partnership tax return because they engage in a trade or business in the United States; however, this may not always be the case.

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