Beneficial Ownership Information: Fincen Clarifies The Reporting Requirements For Active And Dissolved Entities

BACKGROUND

Under the federal Corporate Transparency Act (“CTA”) companies that qualify as “reporting companies” are required to report certain information about their “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury. In general, any company that was formed by filing a document with a secretary of state or similar state administrative office (e.g., Articles of Incorporation, Certificate of Organization, etc.) is a “reporting company” unless the company qualifies for one of the available exemptions. On July 8th, FinCEN published an update to its Beneficial Ownership Information Frequently Asked Questions (“BOI FAQ”), which included clarified guidance on whether companies formed prior to the date the CTA was enacted (January 1, 2024) or ceased to exist prior to such date are subject to the reporting requirements of the CTA.

COMPANIES FORMED PRIOR TO JANUARY 1, 2024

In its recent update to the BOI FAQ, FinCEN clarified that the reporting requirements apply to all companies that qualify as “reporting companies” regardless of when they were formed. However, not all “reporting companies” have the same reporting deadline, since a company’s deadline is based on its formation date. Currently, the following reporting deadlines are in effect:

Companies formed prior to January 1, 2024, must file their BOI report by January 1, 2025.
Companies formed on or after January 1, 2024, and before January 1, 2025, must file their BOI report no later than 90 calendar days after formation.
Companies formed on or after January 1, 2025, must file their BOI report no later than 30 calendar days after formation.

COMPANIES DISSOLVED PRIOR TO JANUARY 1, 2024

Additionally, in its recent update to the BOI FAQ, FinCEN clarified that the reporting requirements do not apply to a company that ceased to exist as a legal entity prior to January 1, 2024. However, if the company began the process of formally and irrevocably dissolving prior to January 1, 2024, but failed to complete the process prior to such date (i.e., continued to exist as a legal entity on or after January 1, 2024), the company is subject to the reporting requirements of the CTA and must file a BOI report. It is crucial to note that a company formed on or after January 1, 2024, which ceases to exist as a legal entity prior to its filing deadline is still required to file a BOI report.

The full BOI FAQ can be found here: Beneficial Ownership Information Frequently Asked Questions.

The attorneys at Dvorak Law Group continue to monitor guidance and legal authority concerning the CTA and are ready to advise you on the CTA and whether your business is subject to its reporting requirements.