As discussed in our three prior client alerts (found here, here, and here), effective as of January 1, 2024, the Corporate Transparency Act (“CTA”) and rules issued thereunder by the Financial Crimes Enforcement Network (“FinCEN”) require most U.S. entities and foreign entities registered to do business in the United States to file reports with FinCEN disclosing information about the entity and its beneficial owners (“BOI Reports”).

FinCEN recently updated its Frequently Asked Questions (“FAQs”) that provide further clarity on compliance requirements. The updates address how the timing of an entity’s dissolution/termination impacts its reporting obligations, reporting requirements for entities owned by Indian Tribes, and what tax identification number should be reported by a company that is a “disregarded entity” for U.S. tax purposes. The complete FinCEN FAQs are available here, and we have summarized the key guidance from the recent updates below.

Reporting Requirements of Dissolved/Terminated Entities

• If a reporting company ceased to exist (e.g., the entity fully completed the process of formally and irrevocably dissolving) before January 1, 2024, it is not obligated to file a BOI Report. A company that was merely administratively dissolved or suspended (e.g., for failing to pay annual taxes and fees) generally would still be subject to CTA reporting requirements unless the dissolution or suspension became permanent before January 1, 2024.
• Though requirements may vary by jurisdiction, completing the dissolution process typically includes filing dissolution paperwork with the applicable jurisdiction of creation or registration, receiving written confirmation of dissolution, paying related taxes or fees, ceasing to conduct any business, and winding up all affairs (e.g., fully liquidating itself and closing all bank accounts).
• If a reporting company continued to exist at any point on or after January 1, 2024—meaning it did not fully complete the dissolution process before that date—it must file a BOI report with FinCEN unless it qualifies for an exemption, even if the entity had ceased conducting business or had wound up its affairs before January 1, 2024. (There is an exemption for “inactive” entities, but that exemption only applies to entities that were in existence on or before January 1, 2020 and satisfy all other requirements of the exemption.)
• A reporting company that was created or registered on or after January 1, 2024 must submit its BOI report to FinCEN by the applicable deadline even if the company fully completed the formal and irrevocable dissolution process before its filing deadline. If a reporting company that has filed its initial BOI report subsequently ceases to exist, it is not required to submit an additional report to FinCEN to indicate that the company has ceased to exist.
• This guidance therefore confirms that reporting companies may not avoid their filing obligations by dissolving or merging into other companies. In addition, transitory merger subs that are formed in connection with acquisitions will, unless they qualify for an exemption, be required to file BOI reports even if the acquisition closes before the filing deadline has occurred.

Beneficial Owners for Entities Owned by Indian Tribes

• A Tribal governmental authority is exempt from the CTA’s reporting requirements if it is a “governmental authority” as defined under the CTA, which means that it is an entity that (1) is established under the laws of the United States, an Indian Tribe, a State or a political subdivision of a State, or an interstate compact, and (2) exercises governmental authority on behalf of such governmental body. This category includes tribally chartered corporations and state-chartered Tribal entities that act on a Tribe’s behalf.
• Any entity whose ownership interests are wholly owned or controlled by a Tribal government authority is also exempt from the CTA’s reporting requirements under the “subsidiary exemption.”
• A reporting company partially owned by an Indian Tribe should not report an Indian Tribe as its beneficial owner since an Indian Tribe is not an individual. Instead, the reporting company should report its beneficial owners, i.e., individuals who directly or indirectly own or control at least 25% or more of the reporting company’s ownership interests or who exercise substantial control over the entity, including individuals who exercise substantial control on behalf of the Indian Tribe. However, if any of these individuals owns or controls these ownership interests exclusively through an exempt entity (including a Tribal governmental authority) or combination of exempt entities, then the reporting company may report the name(s) of the exempt entity or entities in lieu of the name of the individual beneficial owner.

Tax Identification Numbers for CTA Compliance

• A BOI Report requires the inclusion of one of the following types of tax identification numbers (“TIN”) if the reporting company has been issued a TIN: an Employer Identification Number (“EIN”), a Social Security Number (“SSN”), or an Individual Taxpayer Identification Number (“ITIN”).
• If a “disregarded entity” for U.S. tax purposes (i.e., an entity that the Internal Revenue Service does not regard as being separate from its owner for tax purposes) is required to file a BOI Report, it has the following options for reporting a TIN:
  • A disregarded entity may report its own EIN as its TIN if it has one. If the disregarded entity does not have an EIN, it does not need to obtain one so long as it can provide another type of TIN.  For foreign entities without a TIN, providing a foreign tax identification number along with the name of the issuing jurisdiction will satisfy the requirement.
  • If the disregarded entity is a single-member LLC or otherwise has only one owner that is an individual with an SSN or ITIN, it may report that individual’s SSN or ITIN as its TIN.
  • If the disregarded entity is owned by a U.S. entity that has an EIN, the disregarded entity may report its owner’s EIN as its TIN.
  • If the disregarded entity is owned by another disregarded entity or a chain of disregarded entities, the disregarded entity may report the TIN of the first entity up the chain that has a TIN.
• FinCEN also provided guidance on how to quickly obtain a TIN should an entity need one to file an initial BOI report. Please click here to review the guidance.

This client alert is based on the CTA and FinCEN guidance in effect as of the date hereof, and we plan to provide periodic updates as FinCEN provides additional information and market practice regarding CTA filings and requirements becomes more settled.