Important Update: Beneficial Ownership Information (BOI) Reporting
On January 1, 2024, the Corporate Transparency Act (CTA) went into effect, requiring most smaller corporations, limited liability companies, and certain other business entities to file a Beneficial Ownership Information (BOI) report with the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). The BOI report identifies and provides contact information for individuals who own or control the entity, which FinCEN will share with law enforcement to combat money laundering and other illegal activities.
Key Points to Note:
Filing Requirements:Approximately 32 million existing and new businesses are subject to this filing requirement. Since January 1, 2024, about 500,000 BOI reports have been filed online at the FinCEN website.
Court Ruling:On March 1, 2024, a federal district court in Alabama ruled the CTA unconstitutional in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala. 2024), issuing an injunction against enforcement for two plaintiffs: a single individual business owner and the National Small Business Association.
Impact of Ruling:The ruling created uncertainty among businesses required to file BOI reports. If you were not a member of the National Small Business Association as of March 1, 2024, this decision has no immediate impact on you. FinCEN still expects all reporting companies to comply.
Appeal and Compliance:The Justice Department filed a notice of appeal on March 11, 2024, indicating that this trial court decision is not final. Many legal experts believe there are strong grounds to reverse the decision.
If your reporting company existed before 2024, you have until January 1, 2025, to comply with your BOI filing requirement. You may wait until late 2024 to see the outcome of the litigation.
If your reporting company was formed during 2024, you have 90 days after filing your articles of incorporation, articles of organization, or similar documents with the secretary of state to file your BOI report. Immediate compliance is necessary.
State-Level Reporting:
New York: New York has adopted its own BOI reporting law for limited liability companies formed in New York or registered to do business in New York. Existing LLCs must file their reports with the New York Department of State by January 1, 2025. Newly formed LLCs will file their reports when they file their articles or registrations. Other states, such as California, are considering similar laws.
Conclusion:
Staying compliant with the evolving regulatory landscape is crucial for your business. We are here to guide you through the complexities of the Corporate Transparency Act and state-level reporting requirements. Please reach out if you need any assistance or have questions about your specific obligations. We are committed to helping you navigate these changes and ensure your business remains in good standing.