By Anna Vlasova
The Corporate Transparency Act (H.R. 2513 – 116th Congress (2019-2020)) (hereinafter, the “CTA”) has imposed new filing and reporting obligations on certain business entities, such as U.S. Virgin Islands limited liability companies, corporations, and other entities that must file organizational documents with the V.I. Government. The CTA requires that reporting entities file a beneficial ownership information report (hereinafter, a “BOI Report”) with the U.S. Department of Treasury – Financial Crimes Enforcement Network (hereinafter, “FinCEN”). This report must include identifying information for the entity and the beneficial owners.
Currently, a reporting entity formed before January 1st, 2024, must file a BOI Report by January 1st, 2025; a reporting entity formed on or after January 1st, 2024, but before January 1st, 2025, must file a BOI Report within 90 calendar days from the date of formation; and reporting entities formed on or after January 1st, 2025, will have 30 calendar days from the date of formation to file the initial BOI Report. Civil and criminal penalties are possible for noncompliance with the new CTA reporting requirements.
The new reporting obligations under the CTA have sparked an ongoing discourse on corporate transparency and privacy rights across the country. The CTA reporting requirements are currently being challenged in several jurisdictions. For example, in the pivotal case, National Small Business Association v. Yellen, the U.S. District Court for the Northern District of Alabama granted Plaintiff’s Motion for Summary Judgment and determined that, “[t]he Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress’ enumerated powers.” National Small Business United v. Yellen, 2024 WL 899372, at *21 (N.D.Ala., 2024). This decision was appealed, and the matter is currently pending before the 11th Circuit Court of Appeals. Similar lawsuits were filed in other jurisdictions, such as Maine and Ohio, which creates some uncertainty on how an entity should proceed in order to comply with this Act.
Contact Dudley Newman Feuerzeig LLP to understand how this Act effects your company and devise a strategy to comply with the reporting requirements and avoid the potential penalties for non-compliance.