Effective January 1, 2024, the Corporate Transparency Act (the “Act”) requires many U.S. businesses to disclose information regarding their beneficial owners. Failure to comply with the Act can result in significant civil and criminal penalties, including fines of up to $500 per day and imprisonment for up to two years.
Entities in existence before January 1, 2024, must file their Beneficial Ownership Information (BOI) Reports with the Financial Crimes Enforcement Network (FinCEN) no later than December 31, 2024.
Entities formed on or after January 1, 2024, have different deadlines: they must submit their reports within 90 days of formation, and for entities formed after December 31, 2024, the required information must be reported within 30 days.
Constitutional Challenges to the Corporate Transparency Act
The U.S. Federal District Court for the District of Oregon recently denied a motion for preliminary judgment on the constitutionality of the Act, stating that the Act was “likely” constitutional. Additionally, oral arguments were held on September 27th in the 11th Circuit regarding the Alabama District Court’s prior ruling that the Act was unconstitutional. Legal experts are predicting that the 11th Circuit will either reverse the District Court’s decision or remand the case for further proceedings.
While these cases are ongoing, businesses are still required to comply with the Act’s reporting obligations by the upcoming deadlines, regardless of these constitutional challenges. It is essential to ensure that your business is in compliance to avoid potential penalties.
Filing Process and Assistance
While the BOI Report can be filed free of charge online, and in many cases may be completed without legal assistance, we are available to help should you prefer to have our firm manage the filing. We can also assist you in determining if your business qualifies for an exemption.
Exemptions
Certain businesses, including “large operating companies,” may be exempt from filing a BOI Report. A large operating company is defined as an entity that:
- Has a physical presence in the U.S.;
- Employs at least 20 full-time employees; and
- Reports gross receipts or sales exceeding $5 million on its most recent federal income tax return.
