Corporate Transparency Act Year-End Deadlines Rapidly Approaching
As we previously communicated in a client compliance alert last November, the federal Corporate Transparency Act (the CTA went into effect on January 1, 2024) requires certain organizations including corporations, limited liability companies, and other such entities (Reporting Companies) file a Beneficial Ownership Information Report (BOIR) with the Financial Crimes Enforcement Network (FinCEN). In most cases the deadline for filing a BOIR is December 31, 2024.
Unless otherwise exempt (refer to the previous alert’s exemptions section):
- Any entity formed before January 1, 2024 must file a BOIR with FinCEN by January 1, 2025.
- Any entity formed on or after January 1, 2024, must file a BOIR within 90 days of formation.
- Any entity formed on or after January 1, 2025, must file a BOIR within 30 days of formation.
- After the initial filing, it will be necessary to file an updated BOIR any time there is a change in ownership or control as defined in the CTA and within thirty (30) days of such change.
The BOIR filing will require information about the entity and its owners (“Beneficial Owners”). A Beneficial Owner is any individual who owns or controls at least 25 percent of the ownership interests of the Reporting Company or who exercises substantial control over a Reporting Company.
Failure to comply with the above deadlines can result in a civil penalty of up to $500 for each day that a violation has not been remedied and a fine of up to $10,000 and/or imprisonment for up to two years. FinCEN has stated that it does not expect that inadvertent mistakes made in good faith will constitute a violation, but Reporting Companies should not assume that they will receive grace from FinCEN.
While we generally do not provide BOIR preparation and filing services, we refer our clients to nationally recognized third-party vendors that state they will prepare the BOIR based on information that you provide – and that they will file the same with FinCen on your behalf. Those organizations include the following:
You may also consider obtaining a FinCen Identifier to streamline the filing process and to protect your personal confidential information.
To obtain a FinCEN Identifier, you must upload your confidential information to the center directly on the FinCEN website. The agency will then generate a reference number, the FinCEN Identifier. The FinCen Identifier may be used on a BOIR in place of the personal confidential information, thereby preventing the need to share your confidential information with a vendor, or to enter it repeatedly if you are filing a BOIR for more than one entity.
Seek Counsel
Please do not hesitate to contact our firm if you have questions or need assistance preparing for this new filing requirement: 818-990-2120.
Keith T. Zimmet is the Chair of Lewitt Hackman’s Commercial Finance Practice Group, and Co-Chair of our Commercial Real Estate Practice Group.