In July and September 2024, FinCEN provided some additional guidance on the Corporate Transparency Act (“CTA”) by updating its Frequently Asked Questions web page related to beneficial ownership information report filing obligations of terminated, administratively dissolved and disregarded entities, and clarifying the contents of such beneficial ownership information report filings. Below is a brief summary of FinCEN’s updated guidance.
Reporting Obligations for Terminated and Administratively Dissolved Entities
FinCEN’s FAQs provide further guidance as follows:
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Entities that ceased to exist as a legal entity before January 1, 2024, meaning they entirely completed the process of formally and irrevocably dissolving, are not required to report beneficial ownership information to FinCEN (See FAQ C.13).
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Entities created or registered in 2024 or that later wind up their affairs and cease to exist as legal entities prior to their initial beneficial ownership information report deadline are still required to report their beneficial ownership information to FinCEN (and they must do so within 90 days of receiving actual or public notice of creation or registration).[1] These reporting obligations remain applicable to entities that cease to exist as legal entities (meaning they wound up their affairs, ceased conducting business, and entirely completed the process of formally and irrevocable dissolving) before their initial beneficial ownership reports are due (See FAQ C.14).[2]
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For entities created or registered in 2024 or that later cease to exist before their initial beneficial ownership information report deadline, anyone whom the entities authorize to act on their behalf may file a beneficial ownership information report, such as an employee, owner or third-party service provider (See FAQ C.15).
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Except as noted below, initial beneficial ownership information report filings should only include the beneficial owners at the time of the filing, and reporting companies should notify FinCEN of changes to beneficial owners and related beneficial ownership information through updated filings. If an entity is created or registered in 2024 or later ceases to exist before the expiration of their 30 or 90 day filing period, but no one submits an initial beneficial ownership information report to FinCEN until after the entity ceases to exist, then the entity’s beneficial ownership information report should reflect the beneficial ownership information accurate as of the moment prior to the reporting company ceasing to exist (See FAQ G.4).
In Arizona, administratively dissolved corporations and limited liability companies may request for reinstatement for a period of 6 years from the date of administrative dissolution.[3] Unless an entity was formally dissolved (and not administratively dissolved) prior to January 1, 2024, the entity is required to report beneficial ownership information unless a reporting exemption applies.
Under FinCEN’s updated guidance, entities in existence prior to and formally dissolved after January 1, 2024 must still report beneficial ownership information to FinCEN unless a reporting exemption applies. Such an exemption could be the “inactive entity” exemption, meaning an entity must meet the following criteria:
- The entity was in existence on or before January 1, 2020;
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The entity is not engaged in active business;
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The entity is not wholly owned by a “foreign person,” whether directly or indirectly, wholly or partially;
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The entity has not experienced any change in ownership in the preceding 12-month period;
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The entity has not sent or received funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding 12-month period; and
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The entity does not otherwise hold any kind or type of assets, whether in the United States or abroad, including ownership interest in any corporation, limited liability company, or similar entity.
Reporting Obligations for Disregarded Entities
FinCEN’s FAQs provide further guidance as follows:
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A disregarded entity must report beneficial ownership information to FinCEN if it is a reporting company, and such reporting company must provide one of the following types of TIN’s on its beneficial ownership information report if it has been issued a TIN: an EIN, a SSN or an ITIN (See FAQ F.13; FAQ C.1).
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If a disregarded entity has its own EIN, it may report that EIN as its TIN, and if not, it is not required to obtain an EIN so long as it can instead provide another type of TIN (See FAQ F.13).
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If a disregarded entity is a single-member LLC or otherwise has only one owner that is an individual with a SSN or an ITIN, the disregarded entity may report that individual’s SSN or ITIN as its TIN (See FAQ F.13).
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If a disregarded entity is owned by a U.S. entity that has an EIN, the disregarded entity may report that other entity’s EIN as its TIN (See FAQ F.13).
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If a disregarded entity is owned by another disregarded entity or a chain of disregarded entities, the disregarded entity may report the TIN of the first owner up the chain of disregarded entities that has a TIN as its TIN (See FAQ F.13).
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A reporting company must report its TIN when reporting beneficial ownership information to FinCEN, and will be unable to submit its beneficial ownership information report without including a TIN (See FAQ G.3).
Conclusion
For more information on the CTA, please refer to our earlier publications (available here and here) or FinCEN’s small business resource webpage for beneficial ownership information (available here). If you would like to prepare for the CTA and its regulatory reporting requirements, make an ownership report filing, and/or have questions as to how the CTA applies to your business and how to file, please contact Aaron Kacer or Steve Lawrence.
[1] Entities formed in or after 2025 must file their beneficial ownership information reports to FinCEN within 30 days of receiving actual or public notice of creation or registration.
[2] If an entity files an initial beneficial ownership information report and then ceases to exist, there is no requirement for the reporting company to file an additional report with FinCEN noting that the entity has ceased to exist.
[3] A.R.S. §§ 29-3709(A), 10-1422(A).
