FinCEN Issues Additional Helpful Guidance on How to Report a Dissolution of a Company

The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) on Sept. 10, 2024, issued four FAQs to update and clarify how reporting should be undertaken for reporting companies that are dissolved prior to the date they are required to file their Initial Beneficial Ownership Information (BOI) Report.

The guidance addresses 1) when a domestic reporting company is dissolved, 2) when a foreign reporting company ceases to do business in the U.S., 3) who may report on behalf of the reporting company and 4) the individual(s) who should be identified as the beneficial owners of the reporting company if an Initial BOI report is filed after the dissolution of the company.

FAQs

C. 14. If a reporting company created or registered in 2024 or later winds up its affairs and ceases to exist before its initial BOI report is due to FinCEN, is the company still required to submit that initial report?

Yes. Reporting companies created or registered in 2024, no matter how quickly they cease to exist thereafter, must report their BOI to FinCEN within 90 days of receiving actual or public notice of creation or registration. Reporting companies created or registered in 2025 or later, no matter how quickly they cease to exist thereafter, must report their BOI to FinCEN within 30 days of receiving actual or public notice of creation or registration. These obligations remain applicable to reporting companies that cease to exist as legal entities – meaning they wound up their affairs, ceased conducting business and entirely completed the process of formally and irrevocably dissolving – before expiration of the 30- or 90-day period reporting companies have to report their BOI to FinCEN. If a reporting company files an initial BOI report and then ceases to exist before the expiration of the 30- or 90-day period reporting companies have to report their BOI to FinCEN, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist.

C. 15. Who may file a BOI report on behalf of a reporting company created or registered in 2024 or later that ceases to exist before its initial BOI report is due to FinCEN?

Anyone whom a reporting company authorizes to act on its behalf – such as an employee, owner or third-party service provider – may file a BOI report on the reporting company's behalf, even after the reporting company ceases to exist (see FAQ B. 8). Thus, if a reporting company will cease to exist before the expiration of the 30- or 90-day period reporting companies have to report their BOI to FinCEN, it should make arrangements while it is in existence to have the report submitted on its behalf, even if the requisite filing does not occur until after the reporting company ceases to exist. Regardless, the BOI report must be filed by the time such report is due to FinCEN (see Question C. 14).

C. 16. Is a foreign company required to report its beneficial ownership information to FinCEN if the company stopped doing business in the United States before reporting requirements went into effect on January 1, 2024?

A foreign company is not required to report its BOI to FinCEN if it ceased to be registered to do business in the U.S. before Jan. 1, 2024. For purposes of complying with BOI reporting requirements under the Corporate Transparency Act (CTA), a foreign reporting company ceases to be registered to do business in the U.S. when it entirely completes the process of formally and irrevocably withdrawing its registration(s) to do business in the U.S. A foreign company that entirely withdrew any and all registrations to do business in the U.S. before the BOI reporting requirements became effective Jan. 1, 2024, was never subject to the reporting requirements and thus is not required to report its BOI to FinCEN.

Although state or Tribal law may vary, a foreign company typically completes the process of formally and irrevocably withdrawing its registration to do business in a jurisdiction by, for example, filing withdrawal paperwork with its jurisdiction of registration, receiving written confirmation of withdrawal, paying related taxes or fees, ceasing to conduct any business in the jurisdiction and winding up its affairs in that jurisdiction.

If a foreign reporting company (see Question C. 1) was registered to do business in the U.S. on or after Jan. 1, 2024 for any period of time (i.e., the company did not entirely complete the process of withdrawing its registration before Jan. 1, 2024), then it is required to report its BOI to FinCEN, even if the company had wound up its affairs and ceased conducting business before Jan. 1, 2024.

Similarly, if a foreign reporting company was registered to do business in the U.S. on or after Jan. 1, 2024, for any period of time and subsequently withdrew that registration, then the company is required to report its BOI to FinCEN – even if it withdrew the registration before the expiration of the 30- or 90-day period reporting companies have to report their BOI to FinCEN.

For specifics on how to determine when a company withdraws its registration to do business, consult the law of the jurisdiction in which the company was registered. A company that is administratively suspended from conducting business – because, for example, it failed to pay a filing fee or comply with certain jurisdictional requirements – generally does not cease to be registered to conduct business unless the suspension becomes permanent.

G. 4. Should an initial BOI report include historical beneficial owners of a reporting company, or only beneficial owners as of the time of filing?

Except as noted below, reporting companies should notify FinCEN of changes to beneficial owners and related BOI through updated reports.

If a reporting company created or registered in 2024 or later ceases to exist before the expiration of the 30- or 90-day period reporting companies have to report their BOI to FinCEN, but no one submits the reporting company's initial BOI report to FinCEN until after the reporting company ceases to exist, then that BOI report should reflect the BOI accurate as of the moment prior to the reporting company ceasing to exist.

FinCEN's Small Entity Compliance Guide includes more information about when to file updated or corrected BOI reports in Chapter 6, "What if there are changes to or inaccuracies in reported information?"

Takeaways

• The four FAQs round out the guidance as to initial BOI reporting related to reporting companies that dissolve or cease to conduct a U.S. business. The guidance focuses on reporting companies formed or registered in 2024 or 2025.
• Reporting companies created or registered in 2024 or 2025, no matter how quickly they cease to exist thereafter, must report their BOI to FinCEN within the applicable period of 90 or 30 days of receiving actual or public notice of creation or registration.
• A reporting company ceases to exist as a legal entity when it winds up its affairs, ceases to conduct business and entirely completes the process of formally and irrevocably dissolving.
• If a reporting company files an initial BOI report and then ceases to exist before the expiration of the 90- or 30-day period reporting companies have to report their BOI to FinCEN, then there is no requirement for the reporting company to file an additional report with FinCEN noting that the company has ceased to exist.
• A reporting company can authorize anyone to act on its behalf, such as an employee, owner or a third-party service provider, and that person may file a BOI report on the reporting company's behalf, even after the reporting company ceases to exist.
• It is recommended that if an entity plans to cease to exist, it should make arrangements beforehand – while it exists – to have the report submitted on its behalf, even if the requisite filing does not occur until after the reporting company ceases to exist.
• Importantly, FinCEN reconfirmed that an initial BOI report should include only the beneficial owners as of the time of the filing (not historical owners) and thereafter should notify FinCEN of changes to beneficial owners and related BOI through updated reports.
• FinCEN helpfully clarified an exception to the BOI date of filing rule in the situation where a reporting company created or registered in 2024 or later ceases to exist before expiration of the 90- or 30-day period reporting companies have for filing their initial BOI report but the initial BOI report is submitted to FinCEN after the reporting company ceases to exist. In that case, the BOI report should reflect the BOI that is accurate as of the moment prior to the time that the reporting company ceased to exist. In this situation, the reporting company attests that the information is "true, accurate and complete," but the information, pursuant to the FAQ, relates back to the moment before the reporting company ceased to exist, rather than at the time the report is electronically filed.
  • It is curious that FinCEN provided a rule for 2024 and post-2024 reporting companies, but not pre-2024 reporting companies. In that regard, this series of FAQs do not address pre-2024 reporting companies.
• FinCEN also provided guidance for a foreign company that ceases to be registered to do business in the U.S. prior to Jan. 1, 2024, or on after Jan. 1, 2024, or thereafter:
  • Ceasing to be registered to do business means that a company entirely completes the process of formally and irrevocably withdrawing its registration(s) to do business in the U.S.
    • This means when the company entirely completes the process of formally and irrevocably withdrawing its registration(s) to do business in the U.S., which is when it files withdrawal paperwork with its jurisdiction of registration, receives written confirmation of withdrawal, pays related taxes or fees, ceases to conduct any business in the jurisdiction and winds up its affairs in that jurisdiction.
  • For pre-2024 companies ceasing to do business in U.S. before Jan. 1, 2024 – no reporting is needed.
  • For companies formed in 2024 or thereafter ceasing to do business in the U.S. – an initial BOI report is due by the applicable reporting date.

For more information or questions, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.