Delve into the Details: FinCEN's Proposed Rule introduces a pivotal extension for Reporting Companies formed between January 1, 2024, and January 1, 2025, granting them 90 days to submit their initial beneficial ownership reports. This strategic move provides these entities with valuable time to understand their reporting obligations, gather required information, and address any arising questions, thereby facilitating a smoother transition into compliance with the Corporate Transparency Act's stringent requirements.
by LawInc Staff
September 28, 2023
On September 28, 2023, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Proposed Rule to extend the period for reporting beneficial ownership under the Corporate Transparency Act (CTA).
This Proposed Rule is designed to provide reporting companies created or registered between January 1, 2024, and January 1, 2025, with an extended 90-day window (as opposed to the initial 30 days) to submit their beneficial ownership information.
Why the Extension?
The extension aims to afford companies additional time to comprehend their reporting obligations, acquire the necessary information, and address any questions that may arise during the initial reporting process.
This extension is also anticipated to ease the initial reporting volume for the Beneficial Ownership Secure System (BOSS), FinCEN’s newly developed reporting system set to launch in early 2024.
Importantly, it should be noted that the proposed extension does not apply to entities that were formed before January 1, 2024. These entities must adhere to the original reporting deadlines as stipulated by the Corporate Transparency Act.
Additional Resources by FinCEN
To assist entities in complying with the CTA, FinCEN has released a small entity compliance guide, FAQs, and established a small business resource page. These resources are expected to be continuously updated to provide valuable information for companies working to comply with the CTA.
Understanding the Corporate Transparency Act
The CTA, enacted as part of the National Defense Authorization Act on January 1, 2021, introduces significant changes to federal business regulations. It mandates that a wide range of U.S. businesses, especially LLCs and corporations, report their beneficial ownership details to FinCEN, with reporting requirements commencing in 2024.
For a deeper understanding of the CTA and its implications, consider reading LawInc’s comprehensive articles on navigating the CTA and FinCEN’s guide impacts on LLCs and corporations.
Failure to comply with the reporting requirements of the Corporate Transparency Act can lead to significant legal penalties. It is crucial for businesses to understand and adhere to these new rules to avoid adverse consequences.
For detailed information on the penalties associated with non-compliance, refer to our article on Corporate Transparency Act Penalties.
LawInc’s Take
The Proposed Rule’s extension is a strategic and necessary adjustment by FinCEN, given the significant volume of new entities inaugurated annually in the United States.
With FinCEN’s estimates indicating that the Reporting Rule will influence over 32 million pre-existing entities and an anticipated 5 million entities to be established each year commencing in 2024, this extension is not merely beneficial but essential.
The penalties for non-compliance are notably stringent, making this additional timeframe invaluable for businesses to accurately comprehend and prepare for their impending reporting obligations under the Corporate Transparency Act.
Conclusion
The Proposed Rule issued by FinCEN is a crucial development for reporting companies under the CTA. With the extension in the reporting period and the availability of various resources, companies are better equipped to understand and fulfill their reporting obligations effectively and efficiently.
For personalized guidance on navigating the Corporate Transparency Act and the new reporting extension, contact our experienced team at LawInc.
