By: Eric J. Derbes
The Corporate Transparency Act (CTA) was enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act. The CTA establishes a beneficial ownership reporting requirement for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States. The beneficial ownership reports must be filed with the Financial Crimes Enforcement Network (FinCEN), a bureau within the U. S. Department of Treasury. See 31 U.S.C. § 5336.
This reporting is a federal requirement, not a Louisiana requirement. As such, those who are required to file a report must do so at fincen.gov/boi.
Who is a beneficial owner?
A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests. 31 U.S.C. § 5336(a)(3)(A). The statute contains several exemptions from the reporting requirement.
When must reports be filed?
A domestic reporting company formed prior to January 1, 2024, and an entity that registered as a foreign reporting company prior to January 1, 2024, must file an initial report by January 1, 2025.
Any domestic reporting company formed in 2024, must file a BOI report within 90 calendar days of either receiving actual notice that its formation has become effective or the secretary of state or similar office first providing public notice that it has been formed, whichever occurs first.
Any entity that becomes a foreign reporting company in 2024, must file a BOI report within 90 calendar days of either receiving actual notice that it has been registered to do business or the Secretary of State or similar office first providing public notice that it has been registered, whichever occurs first.
Reporting companies formed or registered on or after January 1, 2025, will have 30 calendar days to file their initial BOI reports after receiving actual or public notice that the entity has been formed or registered, whichever occurs first.
Reporting companies are required to update their reports if the beneficial owner(s) change.
Challenge to the CTA and where it stands now.
On Friday, March 1, 2024, Judge Lisles C. Burke, U.S. District Judge for the Northern District of Alabama declared the reporting requirements unconstitutional. The ruling applies only in Alabama. The government is expected to appeal.
Unless the statute is declared unconstitutional in Louisiana, the Fifth Circuit, or nationally, companies should continue to comply with the provisions.
If you would like assistance in your filing, please contact either Eric J. Derbes, 504-207-0912, ederbes@derbeslaw.com or Bryan J. O’Neill, 504-207-0907, boneill@derbeslaw.com.