FinCEN Clarifies That Dissolved Entities Are Still Required to File Beneficial Ownership Information (BOI) Reports

2024-09-24 10:27:23

On July 8, 2024, the Financial Crimes Enforcement Network ("FinCEN") updated its Frequently Asked Questions ("FAQs") (see items C.12-C.14 and D.17) to clarify that the Beneficial Ownership Information ("BOI") reporting rules require reporting companies that existed on or after January 1, 2024, to file reports, even if they have fully dissolved before the initial reporting deadline.

Under the Corporate Transparency Act, a U.S. entity formed by filing with a secretary of state or any similar office or tribal jurisdiction, or a foreign entity formed under foreign law and registered to do business in any U.S. state or tribal jurisdiction on or after January 1, 2024, is considered a reporting company ("Reporting Company"). Reporting Companies must file an initial BOI report by the applicable deadline (90 days from the date of creation or registration for Reporting Companies created or registered in 2024, and 30 days from the date of creation or registration for Reporting Companies created or registered on or after January 1, 2025).

Previously, there was uncertainty as to whether entities that dissolved before the reporting deadline were still required to file such reports. According to the updated FAQs, companies that "fully completed a formal and irrevocable dissolution process" before January 1, 2024, are not required to file a BOI report. This means that certain companies in the process of dissolving or already dissolved may still need to file a BOI report:

(a) Reporting Companies that began dissolution before January 1, 2024, but did not fully complete a formal and irrevocable dissolution process; and
(b) Reporting Companies created on or after January 1, 2024, that dissolved before their reporting deadline.

Therefore, Reporting Companies that initiated dissolution procedures in 2023 must consider whether the process was fully completed before January 1, 2024. If not, they must file an initial BOI report, even if they have now fully dissolved. According to FinCEN's guidance, companies typically complete a "formal and irrevocable dissolution process" by, for example, filing dissolution documents with their formation or registration jurisdiction, receiving written confirmation of dissolution, paying relevant taxes, ceasing business operations, and completing liquidation matters (such as fully liquidating assets and closing all bank accounts).

Reporting Companies are advised to monitor FinCEN's website for regular updates to its FAQs regarding the BOI rules. If they have questions about BOI reporting matters, they may consider consulting external legal counsel.