The clock is ticking for entities to comply with the Corporate Transparency Act ("CTA"), which requires reporting companies to report identifying information about the individuals who directly or indirectly own or control the company to the Treasury Department's Financial Crimes Enforcement Network ("FinCEN"). Reporting companies formed before January 1, 2024 have until January 1, 2025 to file their Beneficial Owner Information Report ("BOIR"). Those formed after January 1, 2024, have 90 days from the date of formation to file.
FinCEN defines reporting companies to include all entities created by filing a document with the secretary of state or any similar office in the United States, as well as foreign entities that have registered to do business in the United States. As a result, millions of entities will need to file BOIRs by the end of this year, and the vast majority have not yet filed.
For smaller reporting companies, the beneficial owner analysis may be straightforward, while for others, it can be much more complex. The latter may want to consider consulting with an attorney or other professional well versed in the CTA to ensure proper compliance. The sooner the better, as FinCEN has warned that noncompliance can bring hefty fines.
For more information regarding the CTA, what information is required to be reported, and other helpful FAQS, see FinCEN's FAQ page. For more tailored guidance, consider consulting with your professional advisors.
As of this month, it is estimated that roughly four million of the expected 32.6 million reporting companies have submitted their initial BOI reports
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