Unraveling the Corporate Transparency Act: Navigating Entity Dissolution

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July 30, 2024

The Corporate Transparency Act (the “CTA”) imposes requirements on entities dissolved in 2024. Effective as of January 1, 2024, the CTA mandates entities disclose information about their “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”). Previously, there was uncertainty about whether dissolved entities must report under the CTA. However, on July 8, FinCEN updated its Frequently Asked Questions (FAQs) to address this uncertainty.

The FAQs clarify that entities dissolved before CTA’s effective date of January 1, 2024, do not need to report under the CTA. This exemption acknowledges that dissolved entities should not be burdened with the CTA disclosure requirements.

Conversely, entities that dissolve on or after January 1, 2024, must comply with the CTA and report if required, regardless of when the entity was formed. For instance, an entity formed before January 1, 2024, that dissolves in 2024 will have until January 1, 2025, to file with FinCEN. Alternatively, an entity formed on or after January 1, 2024, and dissolved in 2024, will have 90 days from the date of formation to file with FinCEN. This reporting requirement ensures stakeholders cannot evade the CTA reporting requirements by dissolving their entity.

An entity dissolved before the CTA became effective January 1, 2024, was never subject to the CTA reporting requirements and is therefore not required to report its beneficial ownership information to FinCEN. If you have any questions about the CTA or entity dissolution, please contact Ruder Ware at [email protected].  If you are interested in receiving updates on the CTA, please subscribe here.

McKenna Coffeen, summer associate, contributed to this blog post.

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