FinCEN Now Requires Reporting of Beneficial Ownership Information for All Companies that Had Any Existence On or After January 1, 2024
In a surprising development, FinCEN indicated on July 8, 2024 that all companies that had or have any existence on or after January 1, 2024 must file a BOI report with FinCEN, even if the company has wound up its affairs and ceased conducting business before its initial BOI report otherwise would have been due.
Since January 1, 2024, the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury has been accepting beneficial ownership information (“BOI”) required to be reported by certain “reporting companies” and their beneficial owner or owners under the Corporate Transparency Act (“CTA”).[1] In its rule implementing the CTA, FinCEN specified the following deadlines for reporting BOI:
- Companies that were formed or registered to do business in the United States before January 1, 2024 have until January 1, 2025 to file their initial BOI reports.[2]
- Companies that are formed or registered to do business in the United States on or after January 1, 2024 but before January 1, 2025 have 90 calendar days after receiving actual or public notice that their company’s formation or registration is effective to file their initial BOI reports;[3] and
- Companies that are formed or registered to do business in the United States on or after January 1, 2025 will have 30 calendar days from receipt of actual or public notice that their company’s formation or registration is effective to file their initial BOI reports.[4]
Based on these deadlines, the conventional wisdom has been that initial BOI reports would not have to be filed with FinCEN for (1) companies formed or registered before January 1, 2024 which are dissolved before January 1, 2025, and (2) companies formed or registered on or after January 1, 2024 but before January 1, 2025 which are dissolved within 90 days of their formation or registration. But FinCEN put a pin in that idea with the release of two relevant new Frequently Asked Questions (“FAQs”) on July 8, 2024.
In the first new FAQ (C. 13), FinCEN asked “Is a company required to report its beneficial ownership information to FinCEN if the company ceased to exist before reporting requirements went into effect on January 1, 2024?”[5] FinCEN responded that a company is not required to report its BOI to FinCEN “if it ceased to exist as a legal entity before January 1, 2024, meaning that it entirely completed the process of formally and irrevocably dissolving.”[6] FinCEN explained that, under state or Tribal law, a company “typically completes the process of formally and irrevocably dissolving by, for example, filing dissolution paperwork with its jurisdiction of creation or registration, receiving written confirmation of dissolution, paying related taxes or fees, ceasing to conduct any business, and winding up its affairs (e.g., fully liquidating itself and closing all bank accounts).”[7] Unless the company completed all of the required steps to formally and irrevocably dissolve before January 1, 2024, then the company must file a BOI report with FinCEN, “even if the company had wound up its affairs and ceased conducting business before January 1, 2024.”[8] This means, among other things, that a company formed or registered before January 1, 2024 must file a BOI report with FinCEN, even if the company formally and irrevocably dissolves before January 1, 2025.
In that same FAQ C. 13, FinCEN added that “if a reporting company was created or registered on or after January 1, 2024, and subsequently ceased to exist, then it is required to report its beneficial ownership information to FinCEN—even if it ceased to exist before its initial beneficial ownership information report was due.”[9] FinCEN elaborated on this issue in the second relevant new FAQ (C. 14), which specifically asked, “If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?” FinCEN answered in the affirmative, indicating that the obligations for companies formed or registered in 2024 to report their BOI within 90 days, and for companies formed or registered in 2025 or later to report their BOI within 30 days, “remain applicable to reporting companies that cease to exist as legal entities—meaning wound up their affairs, ceased conducting business, and entirely completed the process of formally and irrevocably dissolving—before their initial beneficial ownership reports are due.”[10] This means that if a company is formed in 2024 but formally and irrevocably dissolves within 90 days of formation, it still must file a BOI report with FinCEN.
In sum, FinCEN clarified in its July 8, 2024 updated FAQs that, contrary to the accepted wisdom, all companies that have even the most fleeting existence on or after January 1, 2024 must file a BOI report with FinCEN.
[1] The CTA is codified at 31 U.S.C. § 5336. FinCEN’s BOI reporting rule implementing the CTA is codified at 31 C.F.R. § 1010.380. The term “reporting company” is defined at 31 U.S.C. § 5336(a)(11).
[2] 31 C.F.R. § 1080(a)(1)(iii); FinCEN, Small Entity Compliance Guide v. 1.1, at 42 (Dec. 2023) [hereinafter “Small Entity Compliance Guide”].
[3] 31 C.F.R. § 1080(a)(1)(i)(A), (ii)(A); Small Entity Compliance Guide, supra note 2, at 42.
[4] 31 C.F.R. § 1080(a)(1)(i)(B), (ii)(B); Small Entity Compliance Guide, supra note 2, at 42.
[5] FinCEN, Beneficial Ownership Information Reporting Frequently Asked Questions, FAQ C. 13, at 11 (updated July 8, 2024).
[6] Id.
[7] Id.
[8] Id. (“If a reporting company … continued to exist as a legal entity for any period of time on or after January 1, 2024 (i.e., did not entirely complete the process of formally and irrevocably dissolving before January 1, 2024), then it is required to report its beneficial ownership information to FinCEN, even if the company had wound up its affairs and ceased conducting business before January 1, 2024.”).
[9] Id. FAQ C. 14, at 11.
[10] Id. Once the company has completely ceased to exist, then the company is not required to file an additional report with FinCEN noting that it has ceased to exist. Id. at 12.