December 13, 2024
Last week a federal court issued a preliminary nationwide injunction which ruled that the Corporate Transparency Act's reporting requirement is unconstitutional. The Treasury Department is actively trying to reinstate the regulations and the pending January 1 deadline.
The enforcement of this law is now on hold for the time being, and it may stay that way for a while as the case goes through appeals. Considering the upcoming administration change, it’s also likely that this law will be overturned or reversed. However, it’s also possible that the January 1 deadline could be reinstated or the date changed.
If you have not made your filing yet, please stay informed of developments and be prepared to file your report on short notice.
Here’s more information about this law:
The Corporate Transparency Act (CTA) took effect on January 1, 2024. It is a new law that will require more than 30 million U.S. businesses to file a report with the government that they have never filed before. Understandably, there is a lot of concern about it in the market and many people have questions on how to comply.
This new law probably affects you. Here is a quick summary of what this new law requires.
In a nutshell:
The CTA applies to any corporation, LLC or other legal entity registered with a Secretary of State.
The CTA will require every non-exempt company in existence before January 1, 2024 to file its initial report with FinCEN by January 1, 2025. (FinCEN is the Financial Crimes Enforcement Network of the U.S. Treasury Department)
Companies formed on or after January 1, 2024 will need to file the first report within 90 calendar days after the date of formation.
This report will need to identify the company’s “beneficial owners” and, for each of them, provide their (a) full legal name, (b) residential address, (c) date of birth, (d) a “unique identifying number” (which can be a driver’s license or passport) and (e) an image of the document that provides the unique identifying number. Note: Some companies are exempt from the CTA’s requirements and not every owner is a “beneficial owner” for the purposes of the reporting requirement. Also, some people involved in the company’s business will be considered “beneficial owners” even if they don’t own any equity in the company. The resources cited below can help you determine if your company may be exempt and who is subject to the reporting requirement.
Companies formed on or after January 1, 2024 also will need to provide this same information for the “company applicant” (the person who actually registered the company) even if that person is not a beneficial owner. This also applies to the attorney or accountant who registered the business.
Importantly, after a company files its initial report, the company will need to amend that report within 30 calendar days after any change in its beneficial owners or their reported information. As a result, every company should review/amend its corporate documents and adopt a compliance policy to ensure that the company is able to comply with this requirement.
Where to file the report:
If you are confident about your understanding of the requirements, then you can file your own report very easily directly with the government here: https://boiefiling.fincen.gov/. After you make your initial report, you will need to file an amended report within 30 days of any changes in the information you originally submitted. (That includes whenever you get a new address or an updated identification document you used for your report.)
A great source of background information is the Small Entity Compliance Guide published by FinCEN to educate the market.
If you would like assistance from Osensky Law on navigating this new compliance requirement, please contact me for more information.
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