FinCEN Updates FAQs on Beneficial Ownership: Key Insights for Dissolved Entities

On July 8, 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) released additional FAQs to clarify the BOI reporting requirements for dissolved entities. This article aims to provide a clear understanding of these requirements, especially for those assisting clients in complying with the Corporate Transparency Act .

Beneficial Ownership Information Reporting Requirements: An Overview

The Corporate Transparency Act mandates that all companies qualifying as reporting companies must report their beneficial ownership information to FinCEN. This requirement applies to companies regardless of their creation or registration date. Notably, the reporting obligations extend to entities created or registered before the enactment of the CTA on January 1, 2021.

Key Clarifications from FinCEN

Reporting Obligations for Companies Created Before January 1, 2021

Yes, beneficial ownership information reporting requirements apply to all companies that qualify as reporting companies (see FinCEN FAQ Question C.1), regardless of when they were created or registered. Companies are not required to report beneficial ownership information to FinCEN if they are exempt (see FinCEN FAQ Question C.2 and, generally, Section L) or ceased to exist as legal entities before January 1, 2024 (see FinCEN FAQ Question C.13).

Dissolution Before January 1, 2024

A company is not required to report its beneficial ownership information if it ceased to exist as a legal entity before January 1, 2024. For a company to be considered dissolved, it must have entirely completed the formal and irrevocable process of dissolution. This typically includes:

• Filing dissolution paperwork with its jurisdiction of creation or registration.
• Receiving written confirmation of dissolution.
• Paying related taxes or fees.
• Ceasing business activities.
• Winding up its affairs, such as liquidating assets and closing all bank accounts.

Reporting Requirements for Dissolved Entities After January 1, 2024

Entities Existing on January 1, 2024

Any reporting company in existence on or after January 1, 2024, must comply with the BOI reporting requirements, even if it ceases to exist before the filing deadline of January 1, 2025. This means that even if a company formally dissolves before its initial BOI report is due, it is still obligated to file the report.

Entities Created or Registered After January 1, 2024

For companies formed or registered on or after January 1, 2024, the BOI reporting requirements are as follows:

• If a company dissolves before its initial BOI report is due, it must still file a report within the applicable timeframe.
• Companies formed or registered during 2024 must file within 90 days of creation or registration.
• Companies formed or registered on or after January 1, 2025, must file within 30 days of creation or registration.

Dissolved Entities After Filing a BOI Report

If a company ceases to exist after filing its BOI report, it is not required to file an amended report reflecting the dissolution.

Ensuring Compliance with FincenFetch

At FincenFetch, our BOI filing software is designed to simplify the process, ensuring that you and your clients remain compliant with the latest regulatory requirements. Whether you are a CPA, accountant, or other filing professional, FincenFetch provides an efficient and dependable, industry-specific solution for managing BOI reports .

Practical Tips for Compliance

1. Understand Exemptions: Familiarize yourself with the exemptions outlined in Question C.2 and Section L of the FinCEN BOI FAQ.
2. Formal Dissolution: Ensure that the dissolution process is formally and irrevocably completed by filing necessary paperwork, paying related fees, and winding up all business activities.
3. Timely Reporting: Adhere to the reporting timelines based on your company’s creation or dissolution date.
4. Utilize Software Solutions: Leverage tools like FincenFetch to manage and streamline your BOI reporting process.

Start Filing BOI Reports Today

Staying ahead of the latest regulatory updates is essential for professionals assisting clients with BOI reporting. The recent clarifications from FinCEN underscore the importance of understanding the specific requirements for dissolved entities under the CTA. By leveraging FincenFetch, you streamline your BOI reporting process while ensuring full compliance with the law, ultimately providing greater value to your clients.

As the CEO of FincenFetch, it is my goal to educate entities on the importance of BOI filing and how simple it can be. For more information on how FincenFetch can assist you with BOI reporting, schedule a demo with one of our experts or connect with me directly.