New Corporate Reporting Requirement

On January 1, 2024, a new reporting requirement will go into effect under the federal Corporate Transparency Act (“CTA”). With a few exceptions, all existing and future corporate entities will be required to file a report with the Financial Crimes Enforcement Network (“FinCEN”) that will disclose information relating to the beneficial owners and control persons for each entity. Thereafter, updated reports must also be filed within 30 days to correct or report any change to information in a filed report (e.g., change of address).

The overall purpose of the CTA is to help government agencies monitor and deter illicit activities, tax evasion, money-laundering and other “bad acts” through transparency.   The CTA reports will not be generally available to the public, but will be accessible by tax, law enforcement, regulatory and other government agencies, as well as financial institutions.

Existing entities (those formed on or before December 31, 2023) will have until January 1, 2025 to file their report. All new entities formed in 2024 must file within 90 days of their date of formation (which is reduced to 30 days for entities formed in 2025). Failure to comply with the FinCEN requirements will subject the company, and its owners, to penalties.

All business owners need to be aware of these requirements. Additionally, anyone considering forming a new entity should consider doing so not later than December 31, so that the new entity will not have to file its CTA report until January 1, 2025. Any dormant or inactive entities should be closed before the clock strikes midnight this December 31 so that they are not subject to the CTA.

Additional information is available here: https://www.fincen.gov/boi. If you have any questions, or would like one of our attorneys to assist with ensuring your company’s compliance, kindly reach out to us any time.

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