Saved by the Bell: Treasury Extends Deadline for Reporting Owners of Newly Formed Entities
By Anthony P. Daddino on September 27, 2023
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Anthony P. Daddino
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Uncle Sam’s curiosity is often insatiable. But at least he is willing to wait an additional 90 days, based on a newly proposed rule by the Treasury Department.
Of course I’m talking about the new disclosure rules mandated by the 2021 Corporate Transparency Act, which require many private businesses, and virtually all small businesses, to disclose to the U.S. government the identities of their owners and other basic information about them. Under current law, companies formed after January 1, 2024 will be required to file reports within 30 days of formation/registration. For existing companies, a report must be filed within one (1) year. This requirement applies to both domestic entities and foreign (i.e., non-U.S.) which are registered to do business in a U.S. jurisdiction. For a detailed discussion of these reporting requirements, see our prior blog post linked HERE.
Treasury has determined that a 30-day window is too short. In proposed rules issued today, the Treasury Department is seeking to give companies created or registered in 2024 a 90-day period to report their ownership information. Existing companies would still have a year after the requirements take effect to file their initial report. This extended reporting period, however, is only temporary. Companies formed in 2025 and after will have only 30 days to file their disclosure reports. By 2025, FinCEN said it expects companies and their advisors to be more familiar with the reporting requirements, rendering the 30-day period sufficient. [REALLY?!] To review the proposed rule, click HERE.
While this extension is certainly welcomed, it falls short of expectations. Many professionals had hoped the IRS would postpone the January 1, 2024 effective date of this new reporting regime, which is truly revolutionary and raises a host of concerns including those related to privacy and data breach risk.
If you have any questions about this Blog post or any other Treasury, IRS or tax-related matter, feel free to contact me directly at (214) 749-2464 or adaddino@meadowscollier.com.
Of course I’m talking about the new disclosure rules mandated by the 2021 Corporate Transparency Act, which require many private businesses, and virtually all small businesses, to disclose to the U.S. government the identities of their owners and other basic information about them. Under current law, companies formed after January 1, 2024 will be required to file reports within 30 days of formation/registration. For existing companies, a report must be filed within one (1) year. This requirement applies to both domestic entities and foreign (i.e., non-U.S.) which are registered to do business in a U.S. jurisdiction. For a detailed discussion of these reporting requirements, see our prior blog post linked HERE.
Treasury has determined that a 30-day window is too short. In proposed rules issued today, the Treasury Department is seeking to give companies created or registered in 2024 a 90-day period to report their ownership information. Existing companies would still have a year after the requirements take effect to file their initial report. This extended reporting period, however, is only temporary. Companies formed in 2025 and after will have only 30 days to file their disclosure reports. By 2025, FinCEN said it expects companies and their advisors to be more familiar with the reporting requirements, rendering the 30-day period sufficient. [REALLY?!] To review the proposed rule, click HERE.
While this extension is certainly welcomed, it falls short of expectations. Many professionals had hoped the IRS would postpone the January 1, 2024 effective date of this new reporting regime, which is truly revolutionary and raises a host of concerns including those related to privacy and data breach risk.
If you have any questions about this Blog post or any other Treasury, IRS or tax-related matter, feel free to contact me directly at (214) 749-2464 or adaddino@meadowscollier.com.
