FinCEN Updates CTA Guidance
On April 18, FinCEN updated its Frequently Asked Questions regarding the Corporate Transparency Act.
The FinCEN updates, like prior updates, are presented in question and answer format and address a number of issues, including who and what is subject to the Beneficial Ownership Information reporting rules, how to properly report a Company’s address, and an increase to the civil penalty for violations of the reporting rules. A sample of the issues addressed in the update include:
• Who must report their Beneficial Ownership Information: Individuals who exercise substantial control over a Reporting Company, or individuals who own 25% or more of the ownership interests in an entity. An entity, of any kind or classification, cannot be deemed a beneficial owner.
• What is a Reporting Company’s Primary Address: Reporting Companies that do not have a principal place of business in the United States must report the primary location where it conducts business, or where the company receives important correspondence if it conducts business at more than one location in the U.S.
• S-Corporations: FinCEN clarified that S-Corporations, as Reporting Companies, are subject to the Beneficial Ownership Information reporting rules.
• Reporting Beneficial Ownership Information for a Trust: Trusts themselves do not qualify as a beneficial owner, but the settlors, trustees, or beneficiaries of a trust must report their Beneficial Ownership Information if they exercise substantial control or own 25% or more of a Reporting Company through the trust arrangement.
• What is the reporting deadline for a Reporting Company that loses its exempt status:
o Reporting Companies in existence before 2024 have the longer of (1) 30 days from when it loses its exempt status, or (2) until January 1, 2025 to file their Beneficial Ownership Information report.
o Reporting Companies created in 2024 or later that lose their exempt status have 30 days from when it loses its exempt status to file their Beneficial Ownership Information report.
• Civil Penalty increase: FinCEN increased the civil penalty for willfully violating the BOI Reporting Requirements from $500 per day to $591 per day to adjust for inflation.
For a link to the current FinCEN Frequently Asked Questions and additional Corporate Transparency Act information and resources, please visit www.ccmlawyer.com.
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