Corporate Transparency Act – Dealer Compliance Alert

Starting in January of 2025, if the new law survives a court battle, there may be new filing requirements under the Corporate Transparency Act (CTA) mandating that LLCs and other entities (including corporations and LPs) register with FinCEN, the federal agency charged with investigating and combatting financial crimes. A federal court recently ruled that the CTA is unconstitutional, as summarized here. However, currently, the CTA is still in effect for all reporting companies that are not National Small Business Association members.

If the law survives, and if your existing LLCs, “C” or “S” corporations, LPs and so forth do not qualify for an exemption, then you must file an initial report with FinCEN by January 1, 2025, reporting information about the company itself and its beneficial owners.  A “beneficial owner” includes not just an individual holding a certain percentage of interests in a reporting company but also an individual exercising substantial control over the entity.  Companies formed in 2024 have 90 days after formation to file their initial reports, and companies formed in 2025 and later have 30 days to do so.  There is an ongoing obligation to update information previously reported to FinCEN within 30 days of a change.  Potentially applicable exemptions for automotive group entities may include the “large operating company”, “securities reporting issuer” and “subsidiary” exemptions.  An entity-by-entity analysis is required to verify eligibility for any exemption.

Our Firm’s CTA Task Force landing page includes our most recent client alerts regarding the CTA: Corporate Transparency Act Task Force | afslaw.com

There is also more information on the FinCEN website: Beneficial Ownership Information Reporting | FinCEN.gov