On December 26, 2024, a “merits panel” of the U.S. U.S. Fifth Circuit Court of Appeals reinstated the preliminary injunction of the CTA, originally issued by the U.S. Federal District Court for the Eastern District of Texas. Previously, a “motions panel” of the Fifth Circuit had stayed the District Court’s order.

As a result of the reinstated injunction, which is applicable nationwide, reporting companies are not currently required to comply with any filing deadlines of the CTA, including the extended deadlines previously announced by FinCEN.

In response to the ruling, FinCEN issued an alert to this effect, indicating that “reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force” and adding that “reporting companies may continue to voluntarily submit beneficial ownership information reports.”

[last update: January 3, 2025]

Certain reporting deadlines under the CTA were updated by FinCEN on December 23, 2024. The alert issued by FinCEN is as follows:

“In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:

• Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
• Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
  Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
• As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.

On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Sherman Division, issued an order granting a nationwide preliminary injunction. On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction enjoining the Corporate Transparency Act (CTA) entered in the case of Texas Top Cop Shop, Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. Texas Top Cop Shop is only one of several cases that have challenged the CTA pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe—consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay of the injunction pending that appeal with the district court and the U.S. Court of Appeals for the Fifth Circuit.”

[last update: December 24, 2024]

On October 29, 2024, FinCEN issued five notices relating to Hurricane Beryl, Hurricane Debby, Hurricane Francine, Hurricane Helene and Hurricane Milton, extending the CTA filing deadlines for beneficial ownership reports for certain reporting companies.

In order for a company to qualify for the relief, (a) a reporting company must be located in an area that is designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual or public assistance and by the Internal Revenue Service as eligible for tax filing relief, (b) the reporting company’s reporting deadline must fall within the period beginning one day before the date the applicable disaster began and ending 90 days after such date. Please see the relevant notices for more detail:

• Notice relating to Hurricane Beryl
• Notice relating to Hurricane Debby
• Notice relating to Hurricane Francine
• Notice relating to Hurricane Helene
• Notice relating to Hurricane Milton

[last update: November 1, 2024]

The Corporate Transparency Act (“CTA”) is a U.S. federal statute, which, among other things, requires many companies to provide information about their beneficial owners to the federal government, specifically the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury.

The CTA is a landmark statute, aimed at combatting money laundering, the financing of terrorism, violations of sanctions laws, and tax fraud, among other things.

[last update: January 9, 2024]

Yes. Foreign entities registered to do business in the United States are subject to the CTA, as are domestic U.S. entities. Accordingly, the following two broad categories are reporting companies:

– Domestic Reporting Companies: Corporations, limited liability companies and other similar entities created in the United States by the filing of a document with a secretary of state of a U.S. state or any similar office (e.g., U.S. territories, tribal territories).

– Foreign Reporting Companies: Corporations, limited liability companies and other similar entities formed under the laws of a foreign jurisdiction and registered to do business in the United States by the filing of a document with a secretary of state of a U.S. state or any similar office (e.g., U.S. territories, tribal territories).

Likewise, non-U.S. citizens and residents who are beneficial owners of entities subject to reporting obligations also fall within the scope of the CTA. Certain exceptions apply; for example minors, nominees, custodians, agents, certain employees and creditors, among others, fall outside the definition of “beneficial owner”.

Information on persons who form or register a reporting company on or after January 1, 2024 must also be reported.

[last update: January 9, 2024]

Yes. There are 23 types of exempt entities, as summarized below. Each category includes certain criteria that an entity must meet in order to qualify as an exempt entity. Accordingly, professional advice should be sought to determine whether an entity is exempt from reporting requirements.

That said, for many foreign-owned companies that are not regulated entities, the “large company” exemption may be applicable. In order to qualify for that exemption, the company must (a) employ more than 20 full-time employees in the United States, (b) have a physical office in the United States and (c) have reported over than $5 million in gross receipts or sales in its federal income tax return for the previous year.

Exempt Entities

1. Large Operating Companies
2. Securities Reporting Issuers
3. Securities Brokers or Dealers
4. Securities Exchanges or Clearing Agencies
5. Entities Registered under the Exchange Act of 1934
6. Registered Investment Companies or Investment Advisers
7. Banks
8. Credit Unions
9. Depository Institution Holding Companies
10. Money Services and Money Transmitting Businesses
11. Insurance Companies
12. State-Licensed Insurance Producers
13. Pooled Investment Vehicles
14. Venture Capital Fund Advisers
15. Entities Registered Under the Commodity Exchange Act
16. Public Accounting Firms
17. Public Utilities
18. Financial Market Utilities
19. Tax-Exempt Entities
20. Entities That Assist Tax-Exempt Entities
21. Governmental Entities
22. Subsidiaries of Certain Exempt Entities
23. Inactive Entities

[last update: January 9, 2024]

Because the scope of the CTA is limited to domestic U.S. entities and foreign entities registered in the United States, companies that otherwise carry out business with U.S. entities would not normally fall within the CTA’s scope absent formation or registration in the United States. For example, a non-U.S. entity exporting goods to a U.S. company or providing services to U.S. resident persons would not be subject to the CTA unless that entity obtained registration to do business in a U.S. state or other U.S. jurisdiction. On the other hand, if a non-U.S. company incorporates a subsidiary in the United States, that subsidiary will normally be subject to the CTA.

[last update: January 9, 2024]

Information that must be reported to FinCEN falls into three categories: (1) information about the reporting company, (2) information about beneficial owners and (3) information about “applicants”, i.e., persons who formed or registered the reporting company.

Information About the Reporting Company

1. Legal name of the reporting company.
2. Trade names, ‘‘doing business as’’ names, and ‘‘trading as’’ names of the reporting company (whether such names are registered or not).
3. Address of the reporting company.
4. The U.S. State or other jurisdiction of formation or registration of the reporting company.
5. The IRS Taxpayer Identification Number (TIN) of the reporting company. For foreign reporting companies that do not have a TIN, a foreign tax identification number and the name of the issuing jurisdiction.

Information About the Beneficial Owners

1. Name.
2. Residential address.
3. Date of birth.
4. An acceptable identity document and corresponding identification number.

A “beneficial owner” is any individual who, directly or indirectly, (a) owns or controls 25% or more of the reporting company’s ownership interests or (b) has substantial control over the reporting company.

“Substantial control” in turn means any one of the following:

– The individual in question is a senior officer of the reporting company (e.g., president, CEO, CFO, COO).

– The individual has authority to appoint/remove certain officers or a majority of directors (or similar governing body) of the reporting company.

– The individual holds an an important decision-maker role for the reporting company.

– The individual possesses any other form of substantial control over the reporting company.

Because the scope of “beneficial owner” extends beyond shareholders, companies need to assess carefully which individuals are subject to reporting obligations. This analysis can be difficult to make and professional advice may need to be sought.

Information About the Applicants

1. Name.
2. Residential address.
3. Date of birth.
4. An acceptable identity document and corresponding identification number.

Entities formed or registered prior to 2024 are exempt from reporting information on applicants.

[last update: January 9, 2024]

The BOI reporting obligations became effective as of January 1, 2024. Non-exempt entities are subject to different reporting deadlines, depending on when they were created:

– Entities created or registered prior to 2024: Until the end of 2024. Please see update.

– Entities created or registered during 2024: 90 days. Please see update.

– Entities created or registered in or after 2025: 30 days.

– Entities that lose their exempt status: Within 30 days of losing their exempt status

– Entities that become exempt: Within 30 days of becoming exempt (an updated report need to be filed, indicating that the entity is no longer a BOI reporting entity)

[last update: December 24, 2024]

Reporting companies are responsible for identifying their reporting status and beneficial owners, and to correct/update the beneficial ownership information on a regular basis.

Reporting must be done electronically on the FinCEN website.

[last update: January 9, 2024]

Both individuals and companies may be held liable for failing to fulfill their BOI reporting obligations, including failing to report, reporting false information, or failing to correct or update previously filed information.

Civil and criminal penalties may apply for violations of BOI reporting obligations. A person who willfully violates reporting obligations may face civil penalties of up to $500 for each day that the violation continues. The person may also face up to two years imprisonment and a criminal fine of up to $10,000.

[last update: January 9, 2024]

Our U.S. Desk would be happy to answer your questions about the CTA and help you fulfill your BOI reporting obligations.

More information is also available on FinCEN’s website.