In May, we advised that your companies may be obligated to report information regarding certain of their owners/managers/others with control to the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) under the Corporate Transparency Act (“CTA”).
On December 12, 2024, we advised that a U.S. District Court had issued a nationwide preliminary injunction against enforcement of the reporting requirements of the CTA.
Today, we advise you that, on Dec. 23, 2024, a U.S. Court of Appeals granted a stay of the injunction, thereby allowing, among other things, the enforcement of the reporting requirements of the CTA while the case proceeds.
Some companies have an extension to make their filings
- In connection with this ruling, FinCEN issued an Alert that provides, among other things:
- Companies created or registered prior to January 1, 2024, have until January 13, 2025, to file their initial reports with FinCEN.
- Companies created or registered on or after September 4, 2024, have until January 13, 2025, to file their reports with FinCEN.
- Companies created or registered between December 3, 2024, and December 23, 2024 (both dates inclusive), have an additional 21 days from their original filing deadline (90 days after the earlier of receiving actual or public notice that their creation or registration is effective) to file their initial reports with FinCEN.
- Companies created or registered on or after January 1, 2025, have 30 days to file their initial reports with FinCEN after the earlier of receiving actual or public notice that their creation or registration is effective.
Companies created or registered between January 1, 2024 and September 3, 2024
- The Alert does not provide any extension for companies created or registered between January 1, 2024 and September 3, 2024 (both dates inclusive).
- It appears that those companies and their owners/managers/others with control did not benefit from the injunction and were and are required to file within 90 days after the earlier of receiving actual or public notice that their creation or registration is effective.
Exemptions and Extensions
- The CTA provides 23 specific exemptions, some of which are described (generally) below:
- Companies in highly regulated industries (brokers/dealers in securities, banks and state-licensed insurance producers)
- Tax Exempt Entities
- Large Operating Companies (must have at least 20 full-time employees employed in the U.S. and satisfy 4 other requirements)
- Inactive Entities (must satisfy 6 requirements)
- Companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025.
- FinCEN has extended the deadline for filing reports for up to an additional 6 months for companies designated by FEMA as eligible for individual or public assistance due to Hurricanes Beryl, Debby, Francine, Helene, and/or Milton.
- To determine if your company qualifies for an extension due to one or more of the Hurricanes, and for continuing updates and alerts regarding CTA requirements, please visit: https://fincen.gov/boi.
Penalties
Failure to timely file can result in penalties including: (i) civil penalties of up to $500 for each day that the violation continues; (ii) criminal penalties including imprisonment for up to 2 years and/or a fine of up to $10,000; and (iii) senior officers of a company that fail to file may be held personally accountable for any failure.
Please Note:
- If your company is created in a state other than Florida, please check that state’s requirements to ensure compliance and avoid possible penalties.
- FinCEN has learned of fraudulent attempts to solicit information subject to reporting requirements under the CTA. Be on the lookout for fraudulent correspondence. If you receive correspondence: (i) verify the sender; and (ii) do not give personal information to anyone unless you trust the other party and the method by which you are delivering the information. FinCEN issued an Alert on December 18, 2024, to raise awareness of fraud schemes. Learn more about these schemes and where to report them https://fincen.gov/sites/default/files/2024-12/Alert-FinCEN-Scams-FINAL508.pdf.
This communication provides only limited and general information about the CTA, does not constitute legal advice, does not create an attorney-client relationship between Milgrim Law Group and you or your company, or create any duties to provide advice with respect to the CTA. Milgrim Law Group provides advice related to CTA compliance and other matters only to current clients – and only when we expressly agree to do so in writing. Milgrim Law Group is not responsible for updating you or your company about developments regarding the CTA, including with regard to ongoing litigation challenging the CTA.
