The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has proposed a change to the upcoming filing requirement under the Corporate Transparency Act (CTA).
FinCEN is proposing an amendment to the reporting rule for entities created or registered between January 1, 2024, and December 31, 2024. Entities formed within this period would have 90 days to report their ownership information, as opposed to 30 days, with FinCEN recognizing that newly formed entities need time to digest the CTA’s requirements. Public comments to the proposed rule are due by October 28, 2023.
It is important to note that this proposed rule will not change any reporting requirements for entities created prior to January 1, 2024. These entities still need to report their respective beneficial ownership information on or before January 1, 2025.
Per the proposed rule, FinCEN intends to issue additional materials to help entitles understand and comply with the CTA’s requirements. As of now, they have not confirmed when they to expect to publish these new materials. A contact center may or may not be established before January 1, 2024, to assist entities with any questions they may have regarding the new reporting requirements.
Reminder – What is the Corporate Transparency Act?
In September of 2022, the FinCEN issued new requirements under the CTA, which are primarily designed to fight money laundering, mandating that all U.S. formed, and certain international, entities submit complete reports of the names, addresses, and other certain personally identifiable information of their beneficial owners and company applicants.
These new requirements will take coordination and effort from every business entity to ensure compliance. This is an ongoing reporting obligation for all businesses that are subject to the reporting requirements of the CTA.
What businesses are subject to the CTA?
There are a wide range of entities that are subject to the CTA:
- S corporations and LLCs
- Other U.S. entities, such as limited partnerships and limited liability partnerships
- Business trusts/statutory trusts
- Non-U.S. corporations, LLCs, and other similar entities that are registered to do business in the U.S. through a Secretary of State filing
The CTA exempts 23 types of companies from the reporting requirements. The exemptions are largely for entities that are already subject to state or federal reporting requirements, such as banks, governmental authorities, credit unions, money service businesses, investment advisors, insurance companies, public utilities, and accounting firms; however a few exemptions may be applicable to your business and will require a case-by-case analysis.
How can Meyer, Unkovic & Scott help?
These requirements can be a challenge if your business’s records are not in order. To avoid errors and delays, we recommend you start considering these requirements and preparing the relevant information now, as well as developing procedures to update records as changes occur. We can help you understand the reporting requirements for your entity and ensure that you are in compliance.
While the FinCEN web portal is not yet operational, please contact any Meyer, Unkovic & Scott attorney with whom you have worked to begin preparing the necessary documentation for easier filing when the web portal goes live.
To learn more, please contact Patricia E. Farrell at [email protected] or 412.456.2831; Amanda M. Daquelente at [email protected] or 412.456.2845; or Alexis K. McGann at [email protected] or 412.456.2846.