Tax Byte
The 90-Day Clock is Ticking for Beneficial Ownership Reporting
An Alabama Federal District Court found the Corporate Transparency Act and its Beneficial Ownership Interest (BOI) reporting to be unconstitutional (National Small Business United et al v. Yellen et al). The Justice Department on behalf of Treasury filed a Notice of Appeal on March 11, 2024.
What happens now?
While the litigation is ongoing, FinCEN will continue to implement the Corporate Transparency Act as required by Congress, while complying with the court’s order. Other than the particular individuals and entities subject to the court’s injunction, reporting companies are still required to file beneficial ownership reports as provided in FinCEN’s regulations.
Who is exempt from reporting?
FinCEN will not enforce CTA requirements against the plaintiffs in the court action. 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 required to report beneficial ownership information to FinCEN at this time. See Updated: Notice Regarding NSBA v. Yellen. The National Small Business Association has about 65,000 members.
Who must report?
Most of our clients will be required to report beneficial ownership to FinCEN (unless they are one of 65,000 members of the National Small Business Association.) The timing is critical for new entities and the clock is ticking for entities formed in the early part of 2024.
- For entities created during 2024, the entity has 90 days after receiving actual or public notice that their company’s creation or registration is effective to file their initial BOI report. $500 a day penalties can apply.
Example: Vern and Sharon formed an LLC effective Feb. 1, 2024. The LLC must file a BOI report by April 30, 2024.
- Entities existing before Jan. 1, 2024 have until Dec. 31, 2024 to file BOI reports with FinCEN.
Need more info on BOI reporting? See FinCEN’s 50-page Small Entity Compliance Guide.
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