Under the Corporate Transparency Act (CTA), the deadline for “reporting companies” to file their initial beneficial ownership information (BOI) report with FinCEN is just weeks away. If your company is considered a reporting company, and you haven’t filed your report, now is the time to collect the information needed to file your entity’s report before Jan. 1, 2025.
Many cannabis companies are reporting companies for CTA purposes. Your company will be considered a reporting company unless it falls into one of the narrow exceptions under the CTA.
Note that entities that fully ceased to exist on or prior to Dec. 31, 2023, are not required to report. However, any reporting company that existed during any part of 2024 is required to file a BOI report even if the entity is dissolved during 2024.
What Should I Do Now?
Prepare to file:
- Determine if your organization will be a reporting company.
- Determine which individuals will be considered “beneficial owners” for the reporting company under the CTA.
- Collect the required information for each beneficial owner, including their full legal name, date of birth, current residential address (business address for company applicants serving in a professional capacity) and unique identifying number from an acceptable identification document (e.g., a driver’s license, passport or other government-issued identification document for U.S. residents; for non-U.S. residents, a non-expired foreign passport). You will also need an image of the identification document.
- Determine which individuals are company “applicants” under the CTA for entities formed after Jan. 1, 2024, and collect their information.
- If desired, obtain FinCEN numbers from FinCEN’s website for relevant reporting companies or beneficial owners if their information will need to be reported and updated in relation to multiple entities.
File your report:
- Reports are filed using the FinCEN reporting portal.
- No paper filings will be accepted.
- No fees are required to file a report.
Choose your service providers wisely if you seek assistance with reporting. FinCEN has alerted the public that bad actors are making fraudulent attempts to solicit information from both entities and individuals in relation to CTA reporting.
What are the Penalties for Reporting Violations?
Penalties for violations of the CTA (such as failing to report in a timely manner, providing false information or failing to update previously reported information) are steep. Civil penalties can be up to $500 per day that the violation continues, and criminal penalties can include a fine of up to $10,000 per day and/or imprisonment of up to two years. Senior officers of the reporting company may be held accountable for violations.
Warner is Here to Help
For more detailed information about the CTA and its reporting requirements, see our previous blog post here. If you have questions about how the CTA impacts your entities or would like our assistance in filing, please contact your Warner attorney or Emily Cantor.
