UPDATE: On December 3, 2024, a Federal District Court issued a nationwide injunction barring enforcement of the Corporate Transparency Act and ruling that companies "need not comply" with the January 1, 2025 reporting deadline. Read our December 2024 article and please contact Danielle Hunt or Jesse Kobernick if you have any questions.
The deadline for many companies to complete their Corporate Transparency Act (CTA) filing is fast approaching. If you have not yet determined whether your company is covered under the CTA or if you have yet to file, updated guidance from FinCEN can be a helpful resource and a great starting point. FinCEN published guidance that can help companies better understand their reporting obligations, particularly in areas where the law and its regulations are unclear.
The following FAQs—pulled directly from the FinCEN website—have been the most helpful to our clients and our corporate team when analyzing the CTA’s applicability and timing:
- “Do beneficial ownership information reporting requirements apply to companies created or registered before the Corporate Transparency Act was enacted (January 1, 2021)?
Yes. Beneficial ownership information reporting requirements apply to all companies that qualify as “reporting companies” regardless of when they were created or registered. Companies are not required to report beneficial ownership information to FinCEN if they are exempt or ceased to exist as legal entities before January 1, 2024.” - “Is a company required to report its beneficial ownership information to FinCEN if the company ceased to exist before reporting requirements went into effect on January 1, 2024? What are the requirements if a company dissolves on or after January 1, 2024?
A company is not required to report its beneficial ownership information to FinCEN if it ceased to exist as a legal entity before January 1, 2024, meaning that it entirely completed the process of formally and irrevocably dissolving. A company that ceased to exist as a legal entity before the beneficial ownership information reporting requirements became effective on January 1, 2024 was never subject to the reporting requirements and thus is not required to report its beneficial ownership information to FinCEN.
If a reporting company continued to exist as a legal entity for any period of time on or after January 1, 2024 (i.e., did not entirely complete the process of formally and irrevocably dissolving before January 1, 2024), then it is required to report its beneficial ownership information to FinCEN, even if the company had wound up its affairs and ceased conducting business before January 1, 2024.
Similarly, if a reporting company was created or registered on or after January 1, 2024, and subsequently ceased to exist, then it is required to report its beneficial ownership information to FinCEN—even if it ceased to exist before its initial beneficial ownership information report was due.” - “Does the activity or revenue of a company determine whether it is a reporting company?
Sometimes. A reporting company is (1) any corporation, limited liability company, or other similar entity that was created in the U.S. by the filing of a document with a secretary of state or similar office (a domestic reporting company) OR any legal entity that has been registered to do business in the U.S. by the filing of a document with a secretary of state or similar office (a foreign reporting company) that (2) does not qualify for any of the exemptions provided under the CTA.
An entity can qualify for an exemption based on its activity, revenue, and other factors. For example, there is an exemption for certain inactive entities, and another for any company that reported more than $5 million in gross receipts or sales in the previous year and satisfies other exemption criteria. Neither engaging solely in passive activities such as holding rental properties, nor being unprofitable necessarily exempts an entity from the CTA reporting requirements.” - “Is there a requirement to annually report beneficial ownership information (BOI)?
No. There is no annual reporting requirement. Reporting companies must file an initial BOI report and updated or corrected BOI reports as needed.”
- “What should I do if previously reported information changes?
If there is any change to the required information about your company or its beneficial owners in a BOI report that your company filed, your company must file an updated report no later than 30 days after the date of the change.
A reporting company is not required to file an updated BOI report for any changes to previously reported information about a ‘company applicant.’”
Interested in learning more? The full list of FinCEN FAQs can be found here.
As a reminder, the filing deadline for many companies will be January 1, 2025, but that may not be the case in every instance. Companies should take a close look at all the filing deadlines to determine what may apply to them.
- A reporting company that was created before January 1, 2024 must file a BOI report by January 1, 2025.
- A reporting company created in the year 2024 must file a BOI report within 90 days of the company’s creation.
- A reporting company created on or after January 1, 2025 must file a BOI report within 30 days after the company’s creation.
Please contact us with any questions that arise for you or your business regarding the CTA. You can also reach out directly to Danielle Hunt, Jesse Kobernick, Erich Merrill, Mary Ann Frantz, or your Miller Nash point of contact to learn how we may be of assistance.
Additional resources regarding the CTA including its effect on companies, the types of “reporting companies” that are obligated to file a BOI report with FinCEN, and potential exemptions that certain companies might avail themselves can be found here.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
