On September 10, 2024, FinCEN released updated FAQs regarding beneficial ownership information (BOI) reporting under the Corporate Transparency Act (CTA). These updates are crucial for CPAs, accountants, and filing professionals assisting clients with FinCEN Beneficial Ownership Reporting, especially when entities cease to exist before meeting filing requirements. This guide provides a comprehensive breakdown of the updates, compliance requirements, and actionable steps, serving as a valuable resource for professionals navigating these regulations.
Key Highlights of FinCEN’s Updated FAQs
FinCEN recently updated their FAQs on beneficial ownership information reporting under the Corporate Transparency Act (CTA). These updates are crucial for understanding how to handle reporting when entities cease to exist before meeting filing requirements. Here’s a breakdown of the key changes and compliance steps.
1. Entities That Cease to Exist Before Filing
FinCEN’s guidance clarifies that reporting companies created or registered in 2024 or later that cease to exist before filing their initial BOI report must still submit the report. The report should reflect the beneficial ownership information accurate as of the moment prior to the company ceasing to exist (FinCEN BOI FAQs, Section G.4).
🔍 Example Scenario:
A company registered in February 2024 ceases operations in March 2024. The BOI report filed must reflect the beneficial owners just before dissolution, even if filed after the company has ceased to exist.
2. Historical Beneficial Owners
An initial BOI report should only include beneficial owners as of the time of filing, not historical beneficial owners. Reporting companies are required to notify FinCEN of any changes to beneficial ownership through updated reports, as detailed in FinCEN’s Small Entity Compliance Guide, Chapter 6 (FinCEN BOI FAQs, Section G.4).
3. Foreign Companies and Reporting Requirements
Foreign companies are not required to report their beneficial ownership if they ceased doing business in the U.S. before January 1, 2024. However, any foreign company registered on or after January 1, 2024, must comply with FinCEN Beneficial Ownership Reporting requirements, even if it later withdrew its registration or ceased operations before the expiration of the 30- or 90-day reporting period (FinCEN BOI FAQs, Section C.16).
Filing Requirements for Companies That Cease to Exist
Do Dissolved Companies Need to File a BOI Report?
For companies created or registered in 2024, BOI reports must be filed within 90 days. For those registered in 2025 or later, the deadline is 30 days. These requirements hold even if the company ceases to exist within these timeframes. Importantly, no additional report is required if a company ceases to exist after submitting its initial BOI report within the specified period (FinCEN BOI FAQs, Section C.14).
Who Can File a BOI Report for a Ceased Entity?
Anyone authorized by the reporting company—such as an employee, owner, or third-party service provider—may file the BOI report, even if the company ceases to exist before the report is due. It’s crucial for companies to make arrangements in advance to ensure the filing is completed on time (FinCEN BOI FAQs, Section C.15).
💡 Expert Tips for Filing Professionals
To ensure compliance and avoid penalties, CPAs, accountants, and other filing professionals should:
- Review FinCEN’s Small Entity Compliance Guide: Familiarize yourself with Chapter 6 for instructions on when to file updates or corrections.
- Plan for Contingencies: Develop procedures for handling BOI filings for entities that may cease operations before filing deadlines.
- Communicate with Clients: Keep clients informed of their obligations, especially those with entities that might cease operations shortly after registration.
- Maintain Documentation: Document all actions taken, particularly when managing filings for entities that have ceased to exist.
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FinCEN Beneficial Ownership Reporting FAQs
❓ What should an initial BOI report include regarding beneficial owners?
An initial BOI report should include only the beneficial owners as of the filing time, not historical beneficial owners. Changes must be reported through updated BOI reports (FinCEN BOI FAQs, Section G.4).
❓ Do foreign companies that ceased U.S. operations before January 1, 2024, need to file BOI reports?
No, foreign companies that withdrew all U.S. registrations before this date are not required to report their BOI (FinCEN BOI FAQs, Section C.16).
❓ If a company ceases to exist before its BOI report is due, what should be reported?
The BOI report must reflect the beneficial ownership as it was at the moment before the company ceased to exist (FinCEN BOI FAQs, Section G.4).
❓ Who can file a BOI report for a ceased entity?
Any authorized person, including employees, owners, or third-party service providers, can file on behalf of the ceased entity (FinCEN BOI FAQs, Section C.15).
❓ What happens if a company fails to report its BOI within the required timeframe?
Failure to report within the required 30 or 90 days may result in penalties. Compliance is mandatory even if the company ceases to exist within these timeframes (FinCEN BOI FAQs, Section C.14).
