What happened?

On July 8, 2024, the Financial Crimes Enforcement Network (FinCEN) issued new guidance concerning compliance with the Corporate Transparency Act (CTA) by revising and elaborating on the Beneficial Ownership Information (BOI) Reporting Frequently Asked Questions (FAQs).

What are the details?

Key Bites

• The latest FinCEN update clarifies reporting rules for pre-CTA companies and those dissolving before deadlines.

• A company is deemed non-existent only after formal, irreversible dissolution, including paperwork, tax payments, business cessation, and asset liquidation. Entities existing after January 1, 2024, must report beneficial ownership, regardless of business activity.

• Companies formed after this date must report ownership before dissolution.

• Administrative dissolution does not count unless permanent.

The incorporated changes can be found below:

• C. 12. Do beneficial ownership information reporting requirements apply to companies created or registered before the Corporate Transparency Act was enacted (January 1, 2021)?

• C. 13. Is a company required to report its beneficial ownership information to FinCEN if the company ceased to exist before reporting requirements went into effect on January 1, 2024?

• C. 14. If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?

• D. 17. Who should an entity fully or partially owned by an Indian Tribe report as its beneficial owner(s)?

Business Considerations

• All covered entities, even those that have dissolved or ceased to exist on or after January 1, 2024, should adhere to FinCEN’s new guidance.
• All covered entities should be aware of the expanded BOI reporting requirement includes entities without corporate personhood or the capacity to act, underscoring the significance of their legal duty to submit BOI reports to FinCEN.
• All covered entities should ensure their companies comply with these requirements, including reporting beneficial ownership information for any period after January 1, 2024, even if the company had ceased conducting business before this date.
• All covered entities should consider that, if a company is planning to dissolve, it should be aware that it is considered non-existent only after formal, irreversible dissolution, so it must determine if it falls under an exception or must comply.
• All covered entities should consider, given the complexity of these requirements, seeking legal advice to ensure full compliance and comprehension of the potential implications for the business.

Source References

• FinCEN BOI FAQs

Resources

• FinCEN BOI Main Page

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