The following article is a collection of information compiled from several other published sources, but it is not intended to be legal or tax advice. Please consult your own tax and legal counsel to advise how your business should proceed with these compliance filings.
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UPDATE: As of March 2, 2025
The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.
The Treasury Department’s press release is available at this link.
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UPDATE: As of February 18, 2025
Court maneuvering to halt implementation of the Corporate Transparency Act (CTA) continues, but the nationwide injunctions against the CTA have been lifted. In response, FinCEN has issued a new Order that reinstates compliance requirements. This means that for many companies, the new deadline to file Beneficial Owner Information reports (BOI reports) is MARCH 21, 2025.
Cases about the overall legality of the CTA remain pending. In addition, the new US federal government administration has stated that it may modify the requirements of the law to offer relief to some small businesses, and that it will assess its options to further modify reporting deadlines.
The Treasury Department’s announcement of the reinstated filing deadlines is available at this link.
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UPDATE: As of December 26, 2024, a ruling by the U.S. Court of Appeals for the Fifth Circuit has effectively reinstated the nationwide pause on the enforcement of the CTA’s reporting obligations. The Court’s latest decision vacates a prior order issued on December 23, 2024, that had temporarily lifted the injunction blocking enforcement. As a result, the December 3, 2024 preliminary injunction blocking enforcement is back in effect, meaning that companies are once again not required to submit Beneficial Ownership Information Reports (BOIR) at this time.
Although FinCEN has not yet issued an official update, our firm’s legal advisors expect the agency to confirm that companies can voluntarily submit BOIRs without penalties and they anticipate further extensions to filing deadlines as the legal proceedings continue.
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On December 23, 2024, the Fifth Circuit of Appeals lifted a preliminary nationwide injunction against enforcement of the Corporate Transparency Act issued by the US District Court of the Eastern District of Texas. The result is that compliance with the CTA is immediately reinstated.
More details and updated filing deadlines in this article and on the FinCEN site linked below:
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December 3, 2024 update
Corporate Transparency Act Blocked Nationwide by Texas Court
Until new information is announced, U.S. companies are currently not required to file BOI reports with FinCEN due to the nationwide injunction. The Department of the Treasury and FinCEN may appeal the decision (although according to this Bloomberg article, the DOJ has not yet indicated whether it will appeal this decision).
This alert is for informational purposes only and does not constitute legal advice. The information provided is based on current understanding as of the date of publication. Legal outcomes can change rapidly, and individual circumstances may vary. Please consult a qualified attorney for advice specific to your situation.
The original blog article follows from mid-September 2024 below…
The Corporate Transparency Act, which went into effect in January 2024, may require your small business to report information about ownership to the U.S. Federal Government.
The Financial Crimes Enforcement Network ("FinCEN") is a bureau of the U.S. Department of the Treasury - they're responsible for collecting and enforcing the Beneficial Ownership Reporting Rule. According to their website:
Yikes!!
Wait, come again?
First off, this article is not tax or legal advice – please consult your trusted tax or legal advisor to guide you on exactly what actions to take here, or drop us a line and we’ll connect you with a qualified advisor from our network. This is by no means an exhaustive list and the rules still seems to be changing, so we strongly urge you to seek qualified council before you take further action.
That said, here’s a quick overview we've pieced together from several government sources (links at the bottom of this article) as of the time this article was written…
What?
According to the U.S. Chamber of Commerce, the Corporate Transparency Act (“CTA”) was enacted in 2021 to combat illicit activity including tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the U.S. market. Under the new legislation, businesses that meet certain criteria must submit a Beneficial Ownership Information (BOI) Report to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report provides details identifying individuals who are associated with the reporting company.
Why?
The CTA was established to prevent individuals with malicious intent from hiding or benefitting from the ownership of their U.S. entities to facilitate illegal operations which, according to Congress, is a widely-used tactic that affects national security and economic integrity.
Who?
Every corporation, LLC, or other entity created by filing with a secretary of state or similar office must file, unless it qualifies for an exemption. Some entities created by foreign countries and registered to do business in the United States are also required to file. Non-profit community associations must also comply unless they are tax-exempt.
There are 23 categories of entities that are exempt. The most common exception is for large operating companies, defined as:
When?
Here are the initial filing deadlines for your first Beneficial Ownership Information report ("BOI"), according to FinCEN:
While the CTA does not require businesses to submit annual reports, the initial filing period may not be the only time you’ll be required to submit information2.
How?
FinCEN requires information about the company and personal information about each beneficial owner.
A beneficial owner can be someone who owns or controls at least 25% of a company or someone who has substantial control over the company. While some entities may qualify for an exemption, most will be required to file a beneficial ownership report.
Each beneficial owner must submit a unique ID, such as a passport, state ID, or driver's license, along with an image of the document.
You can read the FAQ here, then we recommend that you follow the advice of your CPA or attorney for official guidance that fits your specific circumstances.
Help!
If you’re an active client of our firm, please contact your account lead for assistance - they’ll participate in a conversation between you and your CPA or attorney to get you the guidance you need for this. Otherwise, let’s talk!
Sources: