With half of 2023 behind us, and the Corporate Transparency Act (CTA) set to become effective on Jan. 1, 2024, there remain a number of open issues with respect to the implementation of the CTA. By way of background, and at its core, the CTA requires certain non-exempt companies to disclose the identity of their beneficial owners. What information exactly needs to be disclosed and the process for how companies are actually supposed to disclose it is still unclear.
Beneficial Ownership Secure System
The Financial Crimes Enforcement Network (FinCEN) has yet to share detailed plans on its online database, the Beneficial Ownership Secure System (BOSS), where non-exempt companies will need to report their beneficial ownership information. Additionally, FinCEN also needs to issue final regulations implementing the CTA, which should include rules on access to the database.
Request for a Detailed Plan
These outstanding issues led four members of the U.S. House of Representatives to send a letter on June 7, 2023 directed to Janet Yellen, Secretary of the Treasury, and Himamauli Das, Acting Director of FinCEN, to discuss the status of the implementation of the CTA.
The House of Representatives’ letter expresses concerns with the rollout of the CTA and stresses the need for more clarity, especially as it relates to small businesses, many of which will be required to comply with the CTA.
The letter tasks FinCEN with providing a detailed plan on how they will educate small businesses on their reporting requirements so small businesses can avoid fines and penalties. Specifically, the writers request a compliance guide, infographics, a detailed report on the finalization of future rules, explanations of the hurdles they have encountered and any future hurdles they see, their plans for safeguarding the information reported, an outline of how FinCEN will field calls from reporting companies, and a plan for providing reminders as deadlines approach.
The full letter can be found here.
Questions Remain
The letter requested FinCEN’s response by July 1, 2023. It remains to be seen how FinCEN will respond while continuing to pursue its other obligations related to the CTA rollout, including finalizing its online reporting database.
While we all wait for additional guidance from FinCEN on its reporting database and other final rules, it is imperative that you understand if and how the CTA applies to your business. We may not yet know how businesses will submit its beneficial ownership information, but we do know that the date to comply is rapidly approaching. Please contact Alex Jones (AEJ@kjk.com; 216.736.7241) or Samantha Cira (SMC@kjk.com; 216.736.7232) to ensure that your business is ready to comply with the CTA.