We are barely into fantasy football and pumpkin spice latte (PSL) season and already thinking about a New Year’s countdown? Yes, the Corporate Transparency Act deadline is coming into focus at the end of this year (and may already be here if you started a new business in 2024).
Speaking of PSL, you might want to grab one now.
Under Section 6403 of the Corporate Transparency Act (CTA) enacted in 2021, a new reporting rule issued in September 2022 requires certain businesses to file with the government (FinCEN or Financial Crimes Enforcement Network, a division of the U.S. Department of the Treasury), information about the individual owners of their corporate entities, known as (beneficial ownership information or BOI). The intent of the legislation is to curb fraudulent businesses and transactions from being conducted in the United States, among other things. (Yes, the government wants to know who is operating businesses by name.) For this reason, several small business industry groups and small businesses themselves have filed lawsuits against the United States government on the basis that the CTA is unconstitutional (i.e., unlawful search and seizure) and displaces state authority (i.e., where the states have the power to control business entity formation, not the federal government). At least six lawsuits are pending in federal courts around the country and Ohio is in that mix.[1]
In one case[2], an Alabama court ruled the CTA unconstitutional and therefore unenforceable as against the plaintiffs (the government has since appealed). In another, the court has put the case on hold pending a decision in the Eleventh Circuit Court of Appeals[3]. Suffice it to say there is strong opposition to the CTA and no court has yet to deem it entirely unenforceable as was done with the non-compete ban under the Federal Trade Commission (FTC) ruling last month.
So, if you’re halfway through your PSL now, you should know that as of this writing, you may be facing a December 31, 2024 deadline to register your business’s ownership information. If your business was in existence prior to January 1, 2024, this is your deadline. If, however, you registered a new business on or after January 1, 2024, you have 90 days from the date of that registration to report your ownership information to FINCEN.
There are some businesses who are exempt from this reporting. The best way to analyze whether yours is exempt is to use the FINCEN’s Small Entity Compliance Guide which contains a decision tree helpful in this analysis. You can access that here: https://www.fincen.gov/boi/small-entity-compliance-guide.
If you must report, you will be required to disclose the names of the business’s owners, their addresses, dates of birth and driver’s license or passport document number (similar to the documents required by the BMV). If you formed your company in 2024, you will also need to report the individuals responsible for forming the company (i.e., filed the secretary of state formation documents, prepared them, etc.). These could be your accountant, attorney, or other business employees or consultants. Yes, their personal information is also required.
Once you have the necessary information handy, this process should not take more than 30 minutes to complete. The analysis about whether you are required to report may take longer.
The filing site is: https://www.fincen.gov/boi.
In any event, it is always good practice to prepare for the worst and hope for the best. In other words, calendar this task and perhaps even prepare to file if the CTA remains effective by the end of the year. And here’s to enjoying fall while it lasts.
This information has been provided as a general guide for educational purposes by Vanguard Health Law, LLC. It is not legal advice, which is always given by an engaged attorney who understands the particular facts of your situation and can provide the most appropriate advice.
See Robert J. Gargasz Co. LPA, et al. v. Janet Yellen, et al., United States District Court, Northern District of Ohio, Case No. 1:23-cv-02468-CEF.
National Small Business United, et al. v. Yellen, et al., United States District Court, Northern District of Alabama, Case No. 5:22-cv-01448-LCB.
See Ohio case.
Yorumlar