Since we’re closing in on the end of 2024, we want to provide this update to our clients concerning the upcoming reporting deadline under the Corporate Transparency Act (CTA). If your entity was created or registered to do business in the United States before Jan. 1, 2024, you are required to file your initial Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN) by Jan. 1, 2025.
Overview
As a reminder, the CTA requires many U.S. entities and foreign entities registered to do business in the U.S. to file BOI reports disclosing information about the entity and its beneficial owners. Beneficial owners are individuals who, directly or indirectly, either:
- Exercise substantial control over a reporting company, or
- Own or control at least 25% of the ownership interests of a reporting company.
Reporting Deadlines
There are certain reporting deadlines associated with the CTA:
- Reporting company created/registered before Jan. 1, 2024: File by Jan. 1, 2025, reporting deadline.
- Reporting company created/registered in 2024: File within 90 days of creation/registration.
- Reporting company created/registered on or after Jan. 1, 2025: File within 30 days of creation/registration.
- Reporting company which has already filed and that has any change in beneficial owners (or their underlying information): File within 30 days of such change.
Furthermore, the CTA provides for potential civil and criminal penalties for non-compliance. Additional details can be found in our previous thought leadership covering the CTA.
Reporting Roadmap
- Assess whether an entity qualifies as a “reporting company” under the CTA.
- If so, determine whether that reporting company qualifies for an exemption under the CTA.
- If not exempt, identify the reporting company’s beneficial owners.
- Compile the information needed to file the entity’s BOI report.
- Utilize FinCEN’s online portal to file the BOI report.
Beneficial Ownership Inquiries
The ownership structures of many entities, particularly those featuring complex ownership or management arrangements, can make determining (i) whether an exemption applies to a reporting company and (ii) who qualifies as a beneficial owner under the CTA quite complex. Clients should be aware that they may wish to seek additional guidance on what constitutes an exemption, especially given the intricacy of some corporate structures.
If you have not already begun to address these matters, we encourage you to do so as soon as possible.
