03/12/2025

Update: U.S. Department of Treasury to Abstain from Enforcement of Corporate Transparency Act Penalties

IMPORTANT INFORMATION FOR OUR PARTNERS AT BOSE McKINNEY & EVANS LLP

The United States Department of Treasury announced on March 2, 2025, that no penalties or fines will be enforced or assessed against U.S. citizens or domestic reporting companies for noncompliance with the Corporate Transparency Act (CTA). Also, the Financial Crimes Enforcement Network (FinCEN) is expected to announce by March 21 a proposed updated rule stipulating that only foreign companies will be subject to the CTA’s requirements.

Because of this new announcement, the Business Services Group at Bose McKinney & Evans LLP (BME) recommends that no domestic company make a beneficial ownership filing since there is now no penalty for noncompliance, and future compliance appears likely to become optional. We remain steadfast in our commitment to keeping you aware of any new updates and will continue to do so if new information arises.

As always, we strongly encourage you to reach out to your BME attorney with any questions you may have. We are grateful for the opportunity to support you.

PREVIOUS UPDATE FROM OUR PARTNERS AT BOSE McKINNEY EVANS (2/21/25)

As of Tuesday, Feb. 18, 2025, beneficial ownership information (BOI) reporting requirements under the CTA are back in effect, thanks to a decision by the U.S. District Court for the Eastern District of Texas in Smith, et. al. v. U.S. Department of Treasury.
 
Most reporting companies now have until March 21, 2025, to file their initial BOI reports, but reporting companies formed on or after Feb. 18, 2025, have 30 days from the date of their formation to do so.
 
FinCEN has said it is reassessing deadlines and reporting requirements to reduce the burden for lower-risk entities, including many small businesses. For now, however, the original BOI reporting requirements remain in place. For a brief refresher on such requirements, please see below:
 
What is a “reporting company?” A “reporting company” is any entity that has been formed through the filing of a document with a secretary of state or similar governmental office, provided that it does not qualify as one of 23 different types of exempt entities.  When filing a BOI report, a reporting company must list (1) each of its “beneficial owners,” which includes any person that (a) owns 25% or more of such reporting company, or (b) exercises substantial control over such reporting company, and (2) a “company applicant,” which is the person that either filed, or directed the filing of, such reporting company’s organizational documents.
 
What must be included in a BOI report? When filing a BOI report, a reporting company must provide its full legal name, any trade names it has obtained, its principal office address, its jurisdiction of formation, and its taxpayer identification number. Each beneficial owner and company applicant must provide their full legal name, date of birth, residential address, and a picture of their driver’s license, passport, or other government-issued identification.
 
What must be done after filing the initial BOI report? Following the initial BOI report, each reporting company, beneficial owner, and company applicant must update the BOI report within 30 days of any change in the information included therein. For example, if a reporting company changes its principal office address, or if a beneficial owner moves to a new residential address, such reporting company or beneficial owner, as applicable, has 30 days from the date of such change to update the BOI report accordingly.

If you have questions, please contact Andy @ 317-846-2448