HERE COMES THE CORPORATE TRANSPARENCY ACT
October 4, 2024
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The Corporate Transparency Act (“CTA”) requires companies formed or registered to do business in the United States to file an initial Beneficial Ownership Information (“BOI”) report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) by January 1, 2025, unless an exemption applies. A specific list of the 23 categories of companies which are exempt can be found within FinCEN’s Small Entity Compliance Guide. The CTA’s “large operating company” exemption is expected to be heavily relied upon. To qualify for the large operating company exemption, an entity must meet all three of the following requirements: (1) employ more than 20 full-time U.S. employees; (2) maintain an operating presence at a physical office in the U.S.; and (3) have previously filed a federal income tax return reporting more than $5 million in gross receipts or sales. Importantly, the third requirement focuses on a company’s gross receipts or sales from U.S. sources. Gross receipts or sales from sources outside the United States are excluded from the calculation.
While there are currently nine ongoing cases challenging the CTA on constitutional grounds, reporting companies should be prepared to comply with CTA disclosure obligations as it is unlikely that the constitutional questions at issue in these cases will be decided prior to the January 1, 2025 submission deadline. Since the CTA’s reporting requirements could require information from third parties, it is never too early to start preparing. To assist with timely reporting, FinCEN periodically releases frequently asked questions relating to the information required and the entities impacted. If a reporting company fails to comply with CTA’s reporting requirements, there are potential civil and criminal penalties, including a $10,000 fine and imprisonment for up to two years. If you have any questions regarding the CTA, or need any help with complying with CTA requirements, please contact us and we would be happy to assist you.
This Aviation Blog is intended to keep readers current on developments in the law. It is not intended to be legal advice. If you have any questions, please contact Evelyn Sahr at 202.659.6622 or esahr@eckertseamans.com; Drew Derco at 202-659-6665 or dderco@eckertseamans.com; Jay Julien at 202.659.6648 or jjulien@eckertseamans.com, or Samantha Walter at 412.566.1920 or swalter@eckertseamans.com, or any other attorney at Eckert Seamans with whom you have been working.
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