Updated: Small Businesses no longer required to file new government report by January 1, 2025 but should still be prepared to
Kroon & Mitchell received this update from the MICPA (Michigan CPA organization) for the filing for Corporate Transparency Act. Small business owners are no longer required to file by Jan.1, 2025 but we still recommend that you do and if you have already filed then no action is needed.
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The U.S. District Court for the Eastern District of Texas has issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA), finding that the plaintiffs have met the burden of proof showing the law is a likely violation of both the 1st and 4th amendments of the U.S. Constitution. This action comes just weeks ahead of a Jan 1, 2025 deadline when millions of small businesses are expected to make their first filing.
What it means for you:
- Though small business owners do not have to comply with this law at this time, the nationwide injunction marks only the beginning of what is likely to be a protracted legal battle which could reinstate the Act’s enforceability.
- According to MICPA counsel at Dykema: The practical advice is that companies should be prepared to comply when/if there is a reversal. In the event of a reversal, the court will likely grant a grace period for companies to comply. We also anticipate the Treasury Department and FinCEN to issue additional guidance in light of the decision.
- Small business owners should still file, or be prepared to file, by Jan. 1, 2025.
The MICPA will continue to monitor these developments and share updates and additional resources relating to the implementation of the CTA’s beneficial ownership information reporting requirements with you.
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As a follow up to the letter we sent early this year, the US government is requiring new reporting for businesses called Initial Beneficial Ownership Information Reporting. The new reporting requirements are a result of the Corporate Transparency Act (CTA). The CTA requires certain business entities created or registered to do business in the United States to report identifying information about their Beneficial Owners to FinCen (The Financial Crimes Enforcement Network). There is no cost to file but you may incur fees if you do not file.
FinCen has published a Small Entity Compliance Guide to aid the small business community in understanding the Beneficial Ownership Information (BOI) reporting requirements taking effect January 1, 2024. Below please find a helpful link: BOI Small Compliance Guide (https://www.fincen.gov/boi/small-entity-compliance-guide)
The Reporting Rule is effective on January 1, 2024. If your company already exists as of January 1, 2024, it must file its initial BOI report by January 1, 2025. If your company is created or registered to do business in the United States on or after January 1, 2024, and before January 1, 2025, it will have 90 calendar days after receiving actual or public notice that the company’s creation or registration is effective to file its initial BOI report. If your company is created or registered on or after January 1, 2025, it will have 30 calendar days from actual or public notice that its creation or registration is effective to file its initial BOI report.
We have been advised by our governance board at the American Institute of Public Accountants against advising or assisting our clients in this new reporting requirement. We do feel it is our duty to make clients aware of the new regulations.
Additional information can be found here: https://www.fincen.gov/boi.
