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Alerts (last updated 12/9/2024)
- Businesses are not currently required to register through the Beneficial Owner Information / Corporate Transparency Act program. We advise businesses to gather the necessary information but not to register unless the injunction described below is lifted – the USFWC will continue to monitor this situation.
- A Texas-based federal court issued a sweeping order prohibiting the federal government from enforcing the Corporate Transparency Act (CTA) anywhere in the country. The Court’s decision will likely not be the final word on the CTA’s enforceability. To begin, the Court entered only a preliminary injunction, which it could theoretically reconsider at some point in the future. The more likely next step, however, is that the government will immediately appeal this decision to the United States Court of Appeals for the Fifth Circuit. A further appeal could be taken to the United States Supreme Court. But unless a court specifically dissolves the Texas Top Cop Shop injunction, companies will not be required to comply with the CTA’s reporting requirements. (National Law Review)
- FinCEN has issued five Notices extending the filing deadlines to submit BOI reports for certain reporting companies in response to Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine.
- FinCEN has learned of fraudulent attempts to solicit information from individuals and entities who may be subject to reporting requirements under the Corporate Transparency Act.
The USFWC and DAWI are currently researching resources to pull together for our members and partners to understand the Corporate Transparency Act. This is a new piece of federal legislation that comes into effect on January 1, 2024, and will impact most small businesses in the U.S.
What is the The Corporate Transparency Act (CTA)?
Enacted in 2021, the Corporate Transparency Act was passed to enhance transparency in entity structures and ownership to combat money laundering, tax fraud, and other illicit activities. It’s designed to capture more information about the ownership of specific entities operating in or accessing the U.S. market. The Corporate Transparency Act established the Beneficial Ownership Information program (BOI program), and is overseen by FinCen, the Financial Crimes Enforcement Network which is a part of the U.S. Department of Treasury.
As a membership organization, the USFWC is working alongside our research and development partner, the Democracy at Work Institute, and other ecosystem partners to bring together information on the BOI program and share it with our members and partner organizations.
Why is this important for worker co-ops?
The Beneficial Ownership Information program, requires reporting on business owners and individuals who exercise significant control over a business. For businesses that are not cooperatives, this is a relatively straightforward reporting requirement for the owner(s) of the business. Because cooperatives have a broad-based ownership model, it is not clear currently who exactly within the business ownership needs to report. For worker cooperatives, this can be especially tricky to understand.
The law requires reporting from “Beneficial owners”, with the following definition:
any individual who, directly or indirectly, either:
- Exercises substantial control over a reporting company, or
- Owns or controls at least 25% of the ownership interests of a reporting company.
Help! What do we do? Is this an emergency?
The BOI program will begin to be enacted in 2024, and it will affect most small businesses in the U.S. We encourage all businesses to begin talking with their legal and accounting partners. Here are a few key facts:
- NEW businesses that incorporate on or after Jan 1, 2024 must be particularly attentive, as they only have 90 calendar days to report starting from the date of incorporation. Businesses created after Jan 1, 2025 will only have 30 calendar days to file.
- EXISTING businesses have until Jan 1, 2025 to report. While it’s important to understand this legislation and report to the federal government, you have until Jan 2025 to do so.
The USFWC and DAWI will be putting together a webinar in early 2024 to review the requirement, and how it relates to worker cooperatives. Before then, we will be sure to share information from trusted partners on this issue.
More information on the FinCen website
What if we just don’t file?
The USFWC and DAWI stress the importance of filing, as the fees outlined for non-reporting are high, and can accumulate up to $10,000.
What information is required to be shared with FinCen through the Beneficial Ownership Information program?
- The name of the beneficial owner;
- Date of birth;
- Address; and
- An identifying number from an acceptable identification document such as a passport (U.S. or foreign), U.S. driver’s license, and the name of the issuing state or jurisdiction of the identification document.
Where else can I find information on the Corporate Transparency Act / Beneficial Ownership Information Reporting?
Resources will be added to this list on a regular basis.
