Be Prepared: The CTA Remains a Potential Year-End Nightmare

Heading into the home stretch of 2024, have you assessed whether the Corporate Transparency Act (CTA) applies to your entit(ies)?  If you are unsure whether or how to comply with this sweeping and confusing new federal law, Miller Johnson invites you to contact our CTA Taskforce.

While CTA-related litigation continues to work its way through the courts (including here in Michigan), the U.S. Financial Crimes Enforcement Network (FinCEN) has reiterated the December 31, 2024 deadline for existing, non-exempt entities to make their initial beneficial ownership information reports through its online database. The possibility of any suspension or reduced burden on CTA compliance continues to become even more remote based on a recent federal case filed in Oregon, Firestone v. Yellen, where a plaintiff business owner and other individuals challenged the constitutionality of the CTA.  In an opinion issued on September 20, 2024, the Court denied the plaintiffs’ motion for a preliminary injunction, holding that the plaintiffs were unlikely to succeed on the merits of their constitutional claims. It is possible the U.S. Supreme Court may eventually reach a different outcome; however, the existence of competing district court opinions make it more difficult for the government to restrain or suspend the CTA before the end of the year.

Miller Johnson has been working with clients throughout the year to undertake this new compliance exercise strategically and efficiently.  We may be able to assist with your evaluation of exemptions, understanding the extent of any filing/disclosure obligations and creating a plan for ongoing compliance.  We also partner with third party services that can work with you to collect necessary information from owners, officers, directors and other “beneficial owners” to file with FinCEN.

Failure to comply with the CTA’s reporting obligations, absent an exemption, may subject a company and/or its constituents to civil and, possibly, criminal penalties.  Determining whether an entity qualifies for an exemption can be an involved and technical analysis, so we encourage you to prepare now with a view toward year-end filing requirements.  With sufficient lead-time, Miller Johnson can support you and your entity with the following:

• Determining if your business or entity is a “reporting company” under the CTA
• Assessing if any of the 23 exemptions to the CTA reporting obligations apply to your business or entity
• Analyzing multi-tiered structures, entities, and trusts to identify reporting companies and beneficial owners
• Advising on applicable deadlines for reporting companies
• Identifying “beneficial owners” who must be included on a reporting company’s submissions to FinCEN
• Creating secure and reliable compliance records identifying the company and beneficial owner information that must be reported to FinCEN
• Coordinating with third party providers to leverage entity management platforms for CTA reporting
• Interfacing with beneficial owners, advisors, third parties, trustees, custodians, and other constituents to collect and organize required information

Please contact your Miller Johnson attorney or any one of the Miller Johnson CTA Task Force members (listed to the left) to learn more about how we may be able to support you in preparing for CTA compliance.