Reminder: Corporate Transparency Act (“CTA”) Reporting Requirements

by | Jul 1, 2024 | Industry Updates

At the half-way point of 2024, we wanted to remind everyone of the reporting requirements of the Corporate Transparency Act (“CTA”), which took effect on January 1, 2024. While all non-exempt entities created in 2024 are required to comply with the CTA reporting requirements within 90 days of when they were created, all non-exempt entities created prior to 2024 have until the end of 2024 to report the required information. Thus, leaving only 6 short months to comply with the CTA if you have not done so already. As failure to comply can result in both civil and criminal penalties, we strongly urge all clients to review their entity structures and be prepared to file in the coming months to avoid year end backlogs. Please feel free to reach out to us for further detail or assistance. We have begun assisting many of our clients with the process of complying with the CTA.

As discussed in prior client email blasts, the CTA is a broad sweeping Federal Act that will require many entities (“reporting companies”), not previously subject to reporting requirements, to now disclose certain direct and indirect beneficial owners, down to the individual level, along with additional related information. Failure to make such disclosures can result in civil and criminal penalties. The reporting deadlines are as follows:

Reporting companies created or first registered to do business in 2024 will have 90 calendar days to report such information to the Financial Crimes Enforcement Network of the U.S. Department of Treasury (“FinCEN”).

Reporting companies created or registered to do business on or after January 1, 2025 will have 30 calendar days to report such information to FinCEN.

Reporting companies created or registered to do business prior to January 1, 2024 will have until January 1, 2025, to report such information to FinCEN.
While there are currently 23 exemptions to the Beneficial Ownership Information Reporting Rule (“BOI Reporting Rule”), many apply to highly regulated businesses that are subject to existing reporting obligations of the Federal government. As a result, the burdens of the CTA will fall more often on smaller entities. So-called “holding companies” will likely fail to satisfy the large operating company exemption, even if affiliated with an entity that qualifies for the large operating company exemption.

In light of the potential civil and criminal penalties, it is imperative that our clients with U.S. and foreign entities that are registered with a Secretary of State or any similar office take the BOI Reporting Rule seriously. It is critical to determine whether or not an entity qualifies as a reporting company and, if so, prepare for compliance with the reporting requirements to avoid the authorized FinCEN penalties.

Rosenberg & Estis, P.C. has established the expertise to help guide its clients through the CTA’s complex reporting requirements for both newly formed and pre-existing reporting companies.

If you would like to discuss these reporting requirements or have any questions, please feel free to contact your trusted Rosenberg & Estis, P.C. attorney or William R. Byers, Member of the firm’s Transactional Department, who authored the above.