U.S. Corporate Transparency Act and Beneficial Ownership Information reporting rules reinstated (again)
The back and forth over Beneficial Ownership Information (BOI) reporting rules in the U.S. continues. In the latest development, an appeals court has stayed a previously announced injunction, thereby reinstating the Corporate Transparency Act’s (CTA) requirement for Canadian companies with subsidiaries in the United States to disclose information about the individuals that own or control their company.
As we noted in a previous blog, the U.S. Corporate Transparency Act (CTA) also mandates that, in certain cases, the beneficial owners of a foreign-owned company with U.S. operations must be disclosed to the Financial Crimes Enforcement Network (FinCEN). Various courts in recent months have either temporarily suspended or reinstated the rule as the matter progressed through the U.S. legal system.
FinCEN has now set March 21st, 2025, as the new BOI reporting deadline for most companies. Failure to comply could result in civil penalties of as much as $591 per day, or criminal penalties that could include imprisonment of up to two years and/or a fine of $10,000.
Adding a new twist to the continued legal wrangling over the BOI rule, the U.S. House of Representatives has passed a measure that would extend the reporting deadline until January 1st, 2026. The Senate is currently deliberating on the proposed extension, but given uncertainty as to whether the measure will be passed into law prior to that date, compliance with the March 21st deadline is highly recommended.
For Canadian companies, especially those where the primary shareholder is a discretionary trust, the reporting rule is a significant compliance requirement when doing business South of the Border. Beneficial ownership reporting can be increasingly complex when controlling parties of the trust or beneficiaries must be identified.
Armando Iannuzzi, Co-Managing Partner
For more information on Beneficial Ownership Information and Corporate Transparency Act reporting requirements for Canadian businesses with U.S. operations, contact a member of the KRP LLP team today.
