Have You Filed Your BOI Report? – Dissolved or Dissolving Entities

We are just over six full months into 2024, with just under six months remaining.  For owners of businesses that existed prior to January 1, 2024, that means less than six months remain to file your company’s Beneficial Ownership Information (BOI) Report with FinCEN.  As a reminder, the Corporate Transparency Act (CTA), originally enacted in 2020, places new reporting requirements on many business entities to expose illegal activities, including the use of shell companies to launder money or conceal illicit funds. 

Effective January 1, 2024, the CTA requires that certain businesses it identifies as “Reporting Companies” disclose to FinCEN information about the company, its beneficial owners, and in some cases, the company applicant.  Reporting Companies that are created or registered prior to January 1, 2024, have until January 1, 2025, to file an initial report; reporting companies created or registered after January 1, 2024, but before January 1, 2025, will have ninety days after creation or registration to file a report. Entities created on or after January 1, 2025, will have 30 days to submit the report to FinCEN.  There is no annual report required, but regardless of when the company was formed, if there is any change to the information provided in the initial report, an updated report must be filed within 30 days of the change. 

Reporting Requirements of Dissolved or Dissolving Entities

But what if you have dissolved or are planning to dissolve your company?   Do you still need to file a BOI report?  Companies that officially ceased to exist prior to January 1, 2024, are not required to file a BOI report.  Per new guidance issued by FinCEN on July 8, 2024, unless otherwise exempt from filing, a company that exists as a legal entity on January 1, 2024 or that is created after January 1, 2024 are required to file a BOI Report – EVEN IF THEY CEASE TO EXIST BEFORE THE INITIAL BOI REPORT IS DUE. 

What Does it Mean to Be Dissolved According to FinCEN? 

What does FinCEN consider a “dissolved” company?  The recently updated guidance acknowledges that differences may exist from state to state, but it provides the following as evidence of dissolution:

1. Filing dissolution paperwork with the jurisdiction of creation and/or registration;

2. Receiving written confirmation of dissolution;

3. Paying related taxes or fees; and

4. Ceasing to conduct any business and winding up its affairs (e.g. fully liquidating itself and closing all bank accounts).

Administrative Dissolution Doesn’t Necessarily Count

Instead of filing for dissolution, many owners just choose to let their company lapse by not filing an annual report or paying an annual registration fee.  FinCEN is clear that this is not necessarily sufficient.  In its guidance FinCEN provided: “A Reporting Company that is administratively dissolved or suspended – because, for example, it failed to pay a filing fee or comply with certain jurisdictional requirements – generally does not cease to exist as a legal entity unless the dissolution or suspension becomes permanent.”    

Therefore, if your company was only “administratively dissolved” but could still be reinstated, even if that occurred prior to January 1, 2024, filing your initial report would still be required.  Additionally, going forward, it is recommended that a company follow the formal dissolution process of its state to avoid the requirement to update the BOI report if changes occur.

What if My Company Isn’t Doing Business Anymore? 

If you have a company that was not completely dissolved prior to January 1, 2024, it is still possible that you are not required to file a BOI Report if you fall into the exemption for inactive entities. An inactive entity is going to be an entity that:

1. Was in existence on or before January 1, 2020;

2. Is not engaged in active business;

3. Is not owned by a foreign person, whether directly or indirectly, wholly or partially;

4. Has not experienced any change in ownership in the preceding twelve-month period;

5. Has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding 12 month period; and

6. Does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity.  

Do I Need to File an Update to the Initial BOI Report Upon Dissolution?

If you are required to file an initial report for an entity that was not completely dissolved prior to January 1, 2024, are you required to update that report following dissolution?  As currently interpreted, your company is not required to file an updated BOI Report notifying FinCEN of the company’s subsequent dissolution. 

If you still need to file your BOI report you can do so by following this link:   https://fincen.gov/boi

If you need a little tutorial on how to file your report you can watch our YouTube video for help:

https://youtu.be/6Cl_RKu43Zw?si=pNRUi7f8XiWdlqmd

If you would like to read more about the Corporate Transparency Act you can get the basics from these previous blog posts:

Corporate Transparency Act Imposes New Small Business Reporting Requirements  

Trusts and the Corporate Transparency Act

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This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.