Following a recent appellate court decision, the reporting requirements under the Corporate Transparency Act (CTA) have been reinstated. The Financial Crimes Enforcement Network (FinCEN) has extended the compliance deadline for entities created before January 1, 2024, to January 13, 2025. For background on the CTA and its original reporting requirements, see our earlier article: Reporting Deadline Looms Under the Corporate Transparency Act.
Who Needs to Comply and What to Report?
The CTA applies to most entities registered to do business in the United States, including corporations, limited liability companies, and similar entities. However, exemptions exist for publicly traded companies, financial institutions, and businesses with more than 20 employees, $5 million in annual revenue, and a physical operating presence in the U.S.
Entities subject to the CTA must report beneficial ownership information, including full legal names, dates of birth, residential addresses, and unique identification numbers from an acceptable document such as a passport or driver’s license. Newly formed entities must also disclose information about individuals responsible for their formation. Reports must be updated within 30 days of any changes in beneficial ownership.
Deadlines for Reporting & Penalties
Reporting obligations depend on when an entity was formed. For entities created before January 1, 2024, the compliance deadline has been extended to January 13, 2025. However, entities formed on or after January 1, 2024, must file their reports within 30 days of receiving actual or public notice of formation or registration. Entities formed earlier in 2024 should already have complied with this rule, as the 30-day timeline has been in effect throughout the year. Non-compliance may result in fines of up to $500 per day, criminal penalties of up to $10,000, and possible imprisonment for willful violations.
Practical Steps to Take
To prepare for compliance with the reinstated and extended deadline, businesses should:
- Review ownership structures – Identify all beneficial owners, including individuals with substantial control or ownership interests, especially in entities with complex or layered structures.
- Develop reporting systems – Establish clear internal processes to track and report changes in beneficial ownership.
- Ensure data security – Safeguard sensitive information submitted to FinCEN to reduce risks associated with data breaches.
FinCEN has outlined that all reports must be submitted electronically through its BOI E-Filing system, available on its website at https://boifiling.fincen.gov.
Baker Jenner Can Help
At Baker Jenner, we are here to assist businesses in meeting their obligations under the Corporate Transparency Act. From identifying beneficial owners to ensuring compliance with reporting requirements, we offer the guidance your business needs. Contact us today to learn more.
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