January 1, 2025 Deadline Approaching for FinCEN Reporting

If you own a company or are you thinking of forming one in 2024, you need to disclose many personal details about the owners of your company because of Congress’s passage of the Corporate Transparency Act (the “CTA”). The CTA constitutes one of the largest changes to American corporate law in decades. You must now register with and provide detailed information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Penalties for failure to report include fines of $500 for each day the Reporting Company is in violation of the CTA, up to $10,000 and imprisonment up to 2 years. CTA is supposed to provide law enforcement agencies and financial institutions with data on an entity’s ownership and operations through the required information provided in the “Beneficial Ownership Information Report” (“BOIR”).

IMPORTANT DEADLINE APPROACHING! If your company was formed before January 1, 2024, you have until January 1, 2025 to report to the Financial Crimes Enforcement Network (FinCEN).  The report must include the identity of all owners or entities which own 25% or more of your company. See our article on how to register here.

How does this FinCEN registration work? 

The CTA requires business formed after January 1, 2024, to submit a BOIR to FinCEN within 90 days of formation.  Entities formed after January 1, 2025, have 30 days from formation to register. Existing businesses formed prior to January 1, 2024, will be required to register prior to January 1, 2025. The FinCEN registration may be found here. The FinCEN registration requests information on (i) the Reporting Company; (ii) the Company Applicant; and (iii) the Beneficial Owners. 

The company must provide an EIN number or a social security number of a Beneficial Owner of the entity if the Company does not have an EIN number.  The FinCEN requires a U.S. Street address. Critically, all Beneficial Owners of Companies must provide the name, date of birth, residential address, and passport or driver’s license information (with a photograph of the same).

Who is a Beneficial Owner?

Any individual who owns 25% or more or any individual who exercises substantial control of the entity. Persons with “substantial control” typically are (1) senior officers; (2) individuals with authority to appoint or remove officers or directors; (3) important decision-makers; or (4) individuals who have any other form of substantial control over the entity. 

Will my personal information be public?

The FinCEN will use its best efforts to store this information in a secure and non-public database. The information will be accessible to governmental entities and financial institutions.

Is my entity exempt from the CTA?

A company is likely not exempt unless you are a non-profit, HOA, or an institution who is already subject to federal reporting requirements. Additionally, inactive entities are exempt.[1] The prevailing view is that general partnerships are exempt from the FinCEN registration requirements as well as family trusts (except where the general partnership or trust is a Beneficial Owner of a Reporting Company). Further information regarding the CTA directed at small businesses can be found using this link.

For a more in-depth article on the Corporate Transparency Act, click here. If you have questions on how the CTA impacts your business, or would like help in complying, feel free to contact a skilled business attorney at Galvanize Law. 

[1] An entity is considered inactive if it was formed before January 1, 2020; is not engaged in active business; maintains no foreign ownership; has not had any ownership change in the preceding 12 months; has not sent or received funds in excess of $1,000 in the preceding 12 months; and does not hold any assets.