Yes, Your Small-Business Clients Still Must File FinCEN Reports

What You Need to Know

The Corporate Transparency Act remains in effect for most taxpayers despite a court ruling applying to certain plaintiffs.
FinCEN has updated its guidance to provide additional details on who is required to comply.
Most small-business clients will not qualify under the exemptions that have been created.

The Corporate Transparency Act remains in effect for most taxpayers despite one court’s ruling that it is unconstitutional with respect to those plaintiffs.

Under the legislation, nearly all entities formed or registered to conduct business in the United States must report beneficial ownership information to the Financial Crimes Enforcement Network. The law was designed to limit taxpayers’ ability to use shell companies and ownership structures that can allow money laundering and other criminal activity to take place through those entities. 

The reach of the legislation is incredibly broad. Most small businesses are subject to the new rules, and failure to fully comply with the beneficial ownership reporting requirements can result in significant civil and criminal penalties. Now, FinCEN has recently updated its guidance to provide additional details on who is required to comply.

This new guidance can significantly affect business owners who are contemplating winding down operations — and even newly created entities that are quickly dissolved. 

Who Has to File With FinCEN?

FinCEN’s new beneficial ownership reporting obligations apply to all domestic “reporting companies.” That includes C corporations, S corporations, LLCs (including single-member LLCs), limited partnerships and any other entity formed by filing a document with a secretary of state in the United States. 

Reports must contain basic information about the individuals who hold ownership interests in the entity, such as the owner’s (1) full legal name, (2) date of birth, (3) address, (4) identifying number from the individual’s ID (driver’s license or passport) and (5) a copy of the ID used. 

Entities created before Jan. 1, 2024, are required to file their report containing required beneficial ownership before Jan. 1, 2025. Entities registered after Jan. 1, 2024, will have 90 days from the date their registration becomes effective to report the required information. This 90-day deadline is reduced to 30 days starting in 2025.