The Corporate Transparency Act: Update II
We continue to monitor Corporate Transparency Act (CTA) developments. Two recent regulatory actions were announced by the Financial Crimes Enforcement Network (FinCEN), the bureau responsible for enforcing CTA provisions. Both regulatory actions are intended to help ease the reporting burden on affected reporting companies.
For a general background of the CTA:
Timeline to Report
The first regulatory development relates to the provisions in the originally issued CTA regulations requiring reporting companies formed on or after January 1, 2024, to file their reports within 30 days of formation. FinCEN recently issued proposed regulations to extend this deadline from 30 days to 90 days, but only for companies formed between January 1, 2024, and December 31, 2024. Presumably, new reporting companies formed on or after January 1, 2025, will be subject to the original 30-day requirement.
FinCEN Identifier Numbers
The second regulatory development relates to the requirement that reporting companies must disclose certain information regarding the individuals who “beneficially own” the reporting company. When companies related to the reporting company are thrown into the mix, the reporting requirements can get complicated and burdensome. FinCEN is attempting to mitigate some of this burden by issuing final regulations allowing the reporting company to use a unique FinCEN identifier number to report the related company, rather than requiring the reporting company to disclose the related company’s ultimate beneficial owners. FinCEN must still issue guidance on the process reporting companies use to request and be issued these identifier numbers, but this is a start in the right direction.
Ketel Thorstenson LLP’s role related to the CTA will be limited to providing education and awareness about the new reporting requirements. The CTA does not involve either the Treasury Department or the IRS and no CTA disclosures are required with any federal or state tax filings. Consequently, Ketel Thorstenson LLP is not allowed to be responsible for any client FinCEN filings. Ketel Thorstenson, LLP recommends that taxpayers look towards their legal counsel for further assistance.