2024 Corporate Transparency Act

Jan 5, 2024

By Frank J. Godfrey III

With few exceptions, virtually every registered business in the United States will need to file a report with the Federal Financial Crimes Enforcement Network (FinCEN). While the Corporate Transparency Act does come into effect on January 1, 2024, the due date for existing companies to file their report is January 1, 2025. It would be beneficial for existing companies to wait to file these reports until closer to the end of the 2024 year, because once the initial report is filed, each company will then have an ongoing duty to file updated reports within a shorter 30-day time frame if and when any of the provided information changes. So, by filing the reports nearer the end of the 2024 year, existing companies will have more time where they are not obligated to file updated reports. Companies created after January 1, 2024, will not be able to take advantage of this extended due date, and will need to file their initial report within 30 days of formation.

The reports themselves will be filed on FinCEN’s website at www.fincen.gov/boi. The reports will consist of basic information about the company (e.g. name, industry, address) and also information about “Beneficial Owners” of the company, including their name, residential address, and will require their ID, which has to be a passport, driver’s license, or other State ID. The “Beneficial Owner” definition accounts for any individuals who own at least 25% of the company, but also includes any individuals who exercise “substantial control” of the company, such as senior officers.

We can expect this new program to have a bumpy start, and changes to the requirements may occur. A good step for current companies to take now would be to identify all of the “Beneficial Owners” of your company, especially the individuals who may not have ownership interest in the company, but have “substantial control” of how the company operates. There are other requirements in addition to what we have discussed here. FinCEN has put together some guidance materials that discuss the definitions for Beneficial Owners and the requirements in general. There are also potential exemptions to the reporting requirements, but unfortunately most of them are very narrow and will not apply to most businesses. Please see the Small Entity Compliance Guide provided by FinCEN (at the time of this posting, available on their website) or contact our office for more information.

Current companies should keep the January 1, 2025, due date in mind, and note that all new companies formed after January 1, 2024, will need to file their report within 30 days of creation.

Please do not hesitate to contact us with any questions regarding the Corporate Transparency Act or the initial report to be filed FinCEN.