The Corporate Transparency Act Reinstated

This blog revisits a blog post published by The Law Group of Northwest Arkansas on February 22, 2024. The Corporate Transparency Act (CTA), which initially required non-exempt businesses to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department by January 1, 2024, faced delays due to multiple federal court rulings preventing its implementation. However, the last legal obstacle has been cleared by a ruling from the U.S. District Court for the Eastern District of Texas. In response to this ruling, FinCEN has announced a new deadline for non-exempt businesses to report their beneficial owners to the FinCEN by March 21, 2025.

Compliance

The U.S. Department of the Treasury states that the CTA was primarily implemented to combat the use of shell companies for money laundering to conceal illicit activity such as drug trafficking, corruption, and terrorism. To support this purpose, reporting entities must provide both business and beneficial ownership information to FinCEN. The FinCEN Beneficial Ownership Information Reference Guide defines a beneficial owner as any individual who directly or indirectly exercises substantial control over the company, or who directly or indirectly owns 25% of the company’s ownership interests.

Beginning on March 21, 2025, non-exempt businesses must file their information through the online Beneficial Ownership E-Filing System.  Companies formed after February 19, 2025 have 30 days from their formation to file the required information. Any changes to the company made after the filing a report must be updated through an amendment. If a business chooses not to comply with these requirements, they must confirm their eligibility for an exemption from the CTA’s reporting requirements.  For more information on the rule’s requirements and exemptions, please visit our blog post published on February 22, 2024.

Anticipated Developments

According to the FinCEN notice, during the 30-day period before compliance is required, FinCEN will consider options to further adjust the deadlines; the organization also stated their intent to revise the beneficial ownership reporting rule to simplify compliance for lower-risk small businesses. Additionally,  Congress is considering multiple measures to amend or repeal the CTA, including House Resolution 736,  which would extend the filing deadline for pre-formed businesses to January 1, 2026. This resolution has already been passed in the House of Representatives, and is now under review in the Senate.

What Businesses Should Know

Due to FinCEN stating that it will provide an update on any additional deadline changes before the current March 21, 2025 deadline, reporting businesses may choose to wait until after the update is released before reporting. However, it would be beneficial to gather the necessary information now to be ready for any deadline FinCEN imposes.

If you have any questions regarding The Corporate Transparency Act, or if you or someone you know are required to report, The Law Group of Northwest Arkansas can help. Contact The Law Group of Northwest Arkansas PLLC  to schedule a free, initial consultation. You can contact us by using our online contact form or calling 479-316-3760.