Business Law Journal

Background: Corporate Transparency Act

On January 1, 2024, the CTA became effective and ushered in new detailed reporting requirements for corporations, limited liability companies, limited partnerships, and other types of entities. The CTA requires certain business entities, referred to as “Reporting Company(ies),” to submit their beneficial ownership information report (“BOI Report”) to the FinCEN. The CTA’s stated goal is to strengthen the United States’ defense against illicit financial activities, such as money laundering, tax fraud and terrorism financing.

Unless a reporting exemption applies, the CTA filing deadlines for all Reporting Companies are as follows: 

Once a Reporting Company files a BOI Report, it has an ongoing obligation to update the BOI Report within 30 calendar days of any changes to the report, such as (i) any change to the information reported for the Reporting Company, such as registering a new business name, (ii) a change in beneficial owners, such as appointment of a new CEO or a change in ownership or control of 25% or more, and (iii) any change to a beneficial owner’s legal name, home address, or unique identifying number previously provided to FinCEN. In addition, error corrections must be reported within 30 calendar days of the date the Reporting Company becomes aware, or has reason to believe, that the information reported on the BOI Report was inaccurate. 

Update to Reporting Deadlines

In order to provide relief, FinCEN announced that certain victims of Hurricane Beryl, Hurricane Debby, Hurricane Francine, Hurricane Helene, and Hurricane Milton will receive an additional 6 months to submit their BOI Report (including updates and corrections to prior reports) as required by the CTA.

For a Reporting Company to qualify for the 6-month extension, the Reporting Company must meet the following 2 requirements:

1. First, the Reporting Company must have an original reporting deadline that falls within the period beginning one day before the date the specified disaster began and ending 90 days after that date. Reporting Companies can refer to the chart below to determine whether it meets this first requirement.

2. Second, the Reporting Company’s principal place of business must be located in an area that is designated both (i) by the Federal Emergency Management Agency (“FEMA”) as qualifying for individual or public assistance, and (ii) by the Internal Revenue Service as eligible for tax filing relief.

Reporting Companies that meet the above two requirements will have an additional 6 months from the date their BOI Report was originally due to file their BOI Report. For example, a Reporting Company that was formed on July 25, 2024 and affected by Hurricane Milton would have an original reporting deadline of October 23, 2024. Under this BOI Report relief, it now has until April 23, January 21, 2025 to file its initial beneficial ownership report with FinCEN.

This BOI Report relief is a part of a coordinated federal response to the damage caused by natural disasters and is based on local damage assessments by FEMA. For more information on disaster recovery, please visit: https://www.disasterassistance.gov/.

Conclusion

While this BOI Report relief will be helpful to the victims of the recent hurricanes, this relief only applies to a narrow scope of Reporting Companies. The grant of this limited relief indicates there will be no general extension granted for Reporting Companies as a whole and that the fast-approaching deadlines are firm. All Reporting Companies formed prior to January 1, 2024 must file their BOI Report on or before January 1, 2025. All Reporting Companies form in 2024 that does not quality for the BOI Report relief must file their BOI Report within 90 days of formation.

Reporting Companies with questions regarding this extension, or any questions regarding filing a BOI Report or whether or not an entity is a Reporting Company obligated to file a BOI Report may contact the authors of this article or their usual AALRR counsel.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation does not create an attorney-client relationship. AALRR is not responsible for inadvertent errors that may occur in the publishing process. 

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