The Financial Crimes Enforcement Network (FinCEN) released new FAQs on July 8, 2024, that offer significant clarification on the beneficial ownership information (BOI) reporting requirements for dissolved and terminated entities. These FAQs are essential for entities navigating the complexities of compliance with the Corporate Transparency Act (CTA), particularly those that ceased to exist before or after the reporting requirements came into effect on January 1, 2024.
Dissolved Entities’ BOI Reporting Requirements: Before January 1, 2024
Companies that entirely completed the process of formally and irrevocably dissolving before January 1, 2024, are not required to report their beneficial ownership information to FinCEN. According to FinCEN, a company ceases to exist when it has entirely completed the process of formally and irrevocably dissolving. Generally, this includes:
- 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,
- Winding up its affairs (e.g., fully liquidating itself and closing all bank accounts).
What to consider: Being administratively dissolved or suspended—such as failing to pay a filing fee or comply with certain jurisdictional requirements—does not mean that a company ceases to exist as a legal entity unless the dissolution or suspension becomes permanent. The requirements for reaching irrevocability can be different in each state, so it is advised to see the requirements in the jurisdiction where the entity was formed or registered to confirm.
Dissolved Entities’ BOI Reporting Requirements: Existing on or After January 1, 2024
Companies that continued to exist as legal entities for any period on or after January 1, 2024, must report their beneficial ownership information to FinCEN, even if they had ceased conducting business or wound up their affairs before the reporting requirements became effective. What to consider: If an entity that was formed prior to January 1, 2024, formally and irrevocably dissolves on or after January 1, 2024, it will still be subject to reporting requirements. Just because it dissolved before its due date – January 1, 2025 – does not exclude it from filing an initial BOI Report.
Specifics for Companies Created or Registered in 2024 or Later
Companies created or registered in 2024 must report their beneficial ownership information within 90 days of receiving actual or public notice of creation or registration. For those created or registered in 2025 or later, the reporting window is reduced to 30 days. These timelines remain applicable even if the company winds up its affairs and ceases to exist before the due date of the initial BOI report.
Practical Implications for Dissolved and Terminated Entities
These FAQs provide clear guidance for companies and their advisors on how to navigate the BOI reporting landscape. They highlight the importance of understanding jurisdiction-specific dissolution processes, as administrative dissolutions or suspensions do not necessarily equate to a company ceasing to exist unless they become permanent. Entities permanently dissolved before the CTA effective date can avoid reporting obligations, while those existing beyond the threshold must ensure timely compliance to avoid penalties.
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