The Fifth Circuit Court has overturned a lower court’s injunction against the Corporate Transparency Act (CTA), which mandates that approximately 32.6 million active companies in the U.S. submit their private ownership information to a central database managed by the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department.
As a result of this ruling, all companies established prior to 2024 must file their reports with the Treasury by January 13, 2025. Companies formed in 2024 are required to submit their reports within 90 days of their formation. According to Brown Advisory, a financial firm, “Enforcement of the Corporate Transparency Act has been reinstated along with its impending January 1, 2025 filing deadline.” These reports will include essential legal information about the company, its owners, and those who create or register the entity.
Despite this progress, Forbes notes that a lengthy legal battle may still lie ahead, especially with potential changes in administration that could affect the CTA’s implementation. The estimated cost of compliance with the law is projected to be around $22.7 billion in the first year and $5.6 billion annually thereafter.
The U.S. government and various advocacy groups have long argued for a central registry of beneficial ownership to combat money laundering. However, critics highlight concerns about privacy risks and additional regulatory burdens on businesses, noting that criminals are unlikely to voluntarily provide their information for such a registry.
Business Types Required to Register
Under the Corporate Transparency Act, several types of entities are required to register and report their beneficial ownership information:
– Limited Liability Companies (LLCs): All LLCs must comply with the reporting requirements unless they qualify for specific exemptions.
– Corporations: This includes both C-corporations and S-corporations that are formed or registered in the U.S.
– Partnerships: General partnerships and limited partnerships also fall under the CTA’s requirements.
– Non-Profit Organizations: Certain non-profits, such as political entities like the Libertarian Party of Mississippi, must register despite their non-profit status.
– Foreign Entities: Any foreign entities doing business in the U.S. may also be subject to these reporting requirements.
Entities formed before January 1, 2024, have until January 13, 2025, to file their initial beneficial ownership reports with FinCEN. New companies formed after this date will need to submit their reports within 30 days of formation or registration.
The Corporate Transparency Act (CTA) requires various business entities to register and report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Here’s what you need to know about where to register, the penalties for non-compliance, and the implications of dissolving your company.
Where to Register
Entities required to comply with the CTA must submit their beneficial ownership information through FinCEN’s online filing system. The registration process involves completing Form FinCEN 114, which captures essential details about the company and its beneficial owners. This includes:
– Legal name of the entity
– Business address
– Names and contact details of beneficial owners
– Identification numbers (e.g., Social Security number, passport number)
All companies formed or registered in the U.S., including Limited Liability Companies (LLCs), corporations, partnerships, and certain non-profit organizations, must register unless they qualify for specific exemptions.
Penalties for Non-Compliance
Failure to comply with the CTA can result in significant penalties. Businesses that do not file their reports or provide inaccurate information may face:
– Civil penalties: Up to $500 for each day of non-compliance.
– Criminal penalties: In cases of willful violation, fines can reach up to $10,000, along with potential imprisonment for up to two years.
These penalties underscore the importance of timely and accurate reporting, as non-compliance can lead to substantial financial burdens on businesses.
Can You Just Dissolve Your Company?
Dissolving a company does not exempt it from reporting obligations under the CTA. Any entity that existed as a legal entity on or after January 1, 2024, must still file a beneficial ownership report even if it has since been dissolved. This requirement applies regardless of when the dissolution occurred.
To properly dissolve a company and satisfy compliance with the CTA, an entity must:
1. File dissolution paperwork with the relevant jurisdiction.
2. Receive confirmation of dissolution.
3. Pay any required taxes or fees.
4. Wind up all affairs, such as liquidating assets and closing bank accounts.
Entities that completed their dissolution before January 1, 2024, are exempt from reporting requirements. However, those that have only partially completed the dissolution process must still comply with CTA reporting obligations until all steps are finalized.
In summary, businesses must take proactive steps to ensure compliance with the Corporate Transparency Act’s requirements, including proper registration and understanding the consequences of non-compliance or dissolution.
Holy shiite. Privacy is dying big time in 2025. Good thing News i8 is not a business. It’s just a blog.
Read More
[1] https://www.davispolk.com/insights/client-update/fifth-circuit-grants-stay-preliminary-injunction-enforcement-corporate
[2] https://www.hklaw.com/en/insights/publications/2024/12/corporate-transparency-act-back-in-effect-but-with-extended-deadlines
[3] https://www.mayerbrown.com/en/insights/publications/2024/12/fifth-circuit-reinstates-corporate-transparency-act-filing-requirements-fincen-provides-short-extension-to-year-end-compliance-deadlines
[4] https://www.bipc.com/corporate-transparency-acts-january-1,-2025-filing-deadline-reinstated
[5] https://www.morganlewis.com/pubs/2024/12/corporate-transparency-act-fifth-circuit-lifts-nationwide-injunction-fincen-extends-filing-deadlines
[6] https://www.flastergreenberg.com/newsroom-alerts-Corporate-Transparency-Act-Update-Deadlines-Reinstated.html
[7] https://davisgraham.com/news-events/corporate-transparency-act-reporting-again-required-following-stay-of-preliminary-injunction/
[8] https://www.cooley.com/news/insight/2024/2024-12-24-us-corporate-transparency-act-reporting-requirements-back-in-effect-with-deadline-approaching
[9] https://www.skadden.com/insights/publications/2024/12/fifth-circuit-panel-stays-nationwide-injunction
[10] https://www.stinson.com/newsroom-publications-corporate-transparency-act-naionwide-injunction-stayed-new-filing-deadline-is-january-13-2025
[11] https://www.reuters.com/legal/government/us-appeals-court-allows-anti-money-laundering-law-be-enforced-2024-12-23/
[12] https://www.zerohedge.com/political/millions-companies-must-register-w-massive-us-database-jan-1-due-last-minute-court-ruling
[13] https://www.diligent.com/resources/blog/CTA-corporate-transparency-act
[14] https://www.formyplan.com/what-is-the-corporate-transparency-act/
[15] https://millerjohnson.com/publication/navigating-the-corporate-transparency-act-fincens-guidance-on-dissolved-entities/
[16] https://www.msk.com/newsroom-alerts-corporate-transparency-act
[17] https://www.skofirm.com/news/the-corporate-transparency-act-has-not-gone-away-bad-advice-and-penalties/
[18] https://www.faegredrinker.com/en/insights/publications/2024/7/entities-that-cease-to-exist-must-still-comply-with-the-corporate-transparency-act
[19] https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act
[20] https://wegmanlaw.com/the-risks-of-non-compliance-with-the-corporate-transparency-act/
[21] https://dvoraklawgroup.com/corporate-transparence-act-reporting-for-dissolved-entities/