The Corporate Transparency Act (“CTA”), which became effective January 1, 2024, requires corporations, limited liability companies and certain other entities created (or, as to non-U.S. entities, registered to do business) in any U.S. state or tribal jurisdiction to file a “BOI” (beneficial ownership information) report with the Financial Crimes Enforcement Network (“FinCEN”) office of the U.S. Department of the Treasury. While the CTA does not expressly address whether its BOI reporting obligations apply to limited liability partnerships (LLPs), it is generally understood that LLPs do not fall within the definition of a “reporting company”, and therefore are not subject to the CTA’s BOI reporting obligations. A firm which otherwise meets the definition of a reporting company may nevertheless be exempt from the CTA’s BOI reporting obligations if it falls within one of 23 types of entities defined in the statute as exempt, including, without limitation, securities reporting issuers, banks, and large operating companies.
Non-exempt reporting companies under the CTA must provide the following information in its BOI report: (i) its full legal name and any alternative names through which it does business; (ii) its current address in the United States; (iii) its jurisdiction of formation or registration; and (iv) its taxpayer identification number. In addition, each individual of the reporting company who either (a) exercises “substantial control” over the reporting company; or (b) owns or controls at least 25% of the ownership interests of the reporting company (collectively, the “Beneficial Owner”) must also submit the following information in the BOI report: (i) the Beneficial Owner’s name, (ii) the Beneficial Owner’s date of birth, (iii) the Beneficial Owner’s address, (iv) the Beneficial Owner’s unique identification number from a U.S. driver’s license, passport, or identification document issued by a State; and (v) a photo of such U.S. driver’s license, passport, or identification document issued by a State.
Any reporting company created before January 1, 2024 must file its BOI report by January 1, 2025, any reporting company created after January 1, 2024 and before January 1, 2025 must file its BOI report within 90 days of formation, and any reporting company created after January 1, 2025 must file its BOI report within 30 days of formation. Failure to file the BOI report by the required deadlines may result in substantial penalties, including civil penalties of $591 per day and criminal penalties of two years in prison and a $10,000 fine.
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the CTA and its BOI reporting obligations. As a result of the preliminary injunction, in the Court’s own words, “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
On December 5, 2024, the Department of Justice, on behalf of the Department of the Treasury, filed a notice of appeal. On December 13, 2024, the Department of Justice sought an emergency stay of the injunction from the U.S. Court of Appeals for the Fifth Circuit. On December 23, 2024, the Fifth Circuit stayed the lower court’s preliminary injunction against the CTA, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. Consequently, reporting companies, as indicated below, are once again required to file beneficial ownership information with FinCEN.
In response to the Fifth Circuit’s decision, FinCEN issued an announcement granting a brief extension of the BOI reporting deadlines. Specifically:
For reporting companies that were created or registered prior to January 1, 2024, the deadline to file their initial BOI reports with FinCEN has been extended from January 1, 2025 to January 13, 2025.
For reporting companies formed during 2024, the BOI reporting deadline (as noted above) had been 90 days from formation, such that reporting companies formed before September 4, 2024 should already have filed their initial BOI report by the time the injunction went into effect. Per FinCEN’s recent announcement, 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) now have until January 13, 2025 to file their initial BOI 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 BOI reports with FinCEN (i.e., the adjusted deadline is now 111 days from formation).
For reporting companies created or registered in the United States after January 1, 2025, the original 30 day filing deadline remains in effect.
The status of the BOI reporting deadlines is rapidly evolving. In the near future, the challengers in the Texas case could seek further review from the Fifth Circuit or seek relief from the United States Supreme Court. Additionally, several other federal courts are actively considering challenges against the CTA. Reporting companies should monitor further developments in the Texas case and others related to the CTA.
Finally, please note that, in addition to the CTA, limited liability companies doing business in New York are also subject to the New York LLC Transparency Act (the “NYTA”), which, while modeled after the CTA, has several notable differences from the CTA. The effective date of the NYTA is January 1, 2026, and LLCs that are formed in New York or qualified to do business in New York prior to January 1, 2026 will have until January 1, 2027 to make their initial filings under the NYTA.
If you have questions about the CTA, please contact one of our partners: Matthew S. Quinn, at (212) 447-5510 or mquinn@QMlegal.com, Christopher P. McCabe, at (212) 447-5520 or cmccabe@QMlegal.com, Simon Block, at (212) 447-5530 or sblock@QMlegal.com, Jonathan Krukas, at (212) 447-5560 or jkrukas@QMlegal.com, or Eric Thorsen, at (212) 447-5570 or ethorsen@QMlegal.com.
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