In prior blogs, I wrote about the federal Corporate Transparency Act (“CTA”) passed on January 1, 2021. Implementation of certain aspects of the CTA were deferred until the United States Department of Treasury could pass rules that clarify the new law. The regulatory process is progressing. Consider the following…
The CTA will require most existing and new corporate entities (e.g., corporations, limited liability companies, etc.) to report personal information about company owners and incorporators to the Department of Treasury. The face of the CTA raised many questions as to the precise scope of the law and its implementation. On April 5, 2021, the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury issued an advance notice of proposed rulemaking (ANPRM). The ANPRM invited public commentary on the CTA and requested input on forty-eight specific questions.
After receiving commentary, FinCEN published a Notice of Proposed Rulemaking (NPRM) on December 7, 2021. The proposed rules in FinCEN’s recent NPRM attempt to clarify three questions surrounding the reporting requirements under the CTA: Who must file; What information must be filed; and When filing is required. My prior newsletters addressed the questions of who and what. This blog addresses the question of when.
Effective date and deadlines…
The CTA states that the reporting requirement become effective when the Department of Treasury prescribes regulations for complying with the CTA. It also required the Department of Treasury to “promulgate” those regulations by the end of 2021. Interestingly, the Department of Treasury has taken the position that its December 7, 2021 NPRM fulfills that requirement—notwithstanding the fact that NPRM makes it clear that the regulations are not effective as yet, and, presently, there is no proposed effective date.
Once the regulations take effect, the question of when a company must report depends on its creation date. A company created before the effective date will be required to file its report within one (1) year of the effective date of the regulations. A company created on or after the effective date of the regulations will be required to file its report within fourteen (14) days of its creation date.
PLEASE NOTE: This blog is merely for the general interest of the reader. It is not legal advice or opinion and it does not create an attorney-client relationship. Please call me at 973-921-0600 if you’d like to have a free initial telephone consultation or learn more about me or my practice. Thank you.