As the January 1, 2024, start date for private entities to begin reporting beneficial ownership under the Corporate Transparency Act (CTA) rapidly approaches, increasing attention is being given to how these far-reaching disclosure obligations will impact the many entities that will be subject to the new rules. A recent publication by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) provides small businesses and other organizations a guide to prepare for compliance with the new requirements of the CTA.
As summarized in our previous alert, regulations promulgated by FinCEN in 2022 will require millions of privately held corporations, LLCs, limited partnerships and other entities created or doing business in the U.S. to report their ownership to the U.S. government starting January 1, 2024. Reporting companies created or registered before January 1, 2024, will have one year to file their initial reports. Reporting companies created or registered after January 1, 2024, will have 30 days after creation or registration to file their initial reports.
On September 18, 2023, FinCEN published the Small Entity Compliance Guide to assist organizations preparing for compliance with the CTA. The guide provides a helpful framework, checklists and other tools for organizations to understand the beneficial ownership reporting requirements of the CTA.
We expect to see further guidance from FinCEN and others with respect to the application of the CTA as the reporting period approaches. Clients are encouraged to proactively review FinCEN’s guidance given the novelty of the CTA’s beneficial ownership reporting requirements.