Readiness levels progressing towards January 1st effective date
Levels of preparedness among companies that are subject to the Corporate Transparency Act’s (CTA) new beneficial ownership reporting rule remain low, according to a new online survey by Wolters Kluwer CT Corporation, conducted as part of a CTA readiness session Wolters Kluwer hosted for market participants in mid-November.
The topic has generated a high level of interest, as reflected in responses by the more than 4,000 attendees and those surveyed during a November 15th Wolters Kluwer webinar, “Preparing for the Corporate Transparency Act.” Forty-three percent of those surveyed indicated they were between 25% to 50% prepared to comply with the CTA’s new beneficial ownership reporting requirements, which take effect January 1, 2024. The next largest group, 38%, indicated they were not at all prepared.
“While the CTA beneficial ownership rule represents one of the most significant regulatory developments to impact millions of businesses, there remains much preparatory work for those organizations subject to the new rule, according to our latest survey of businesses, law firms and CPA firms,” said George May, Vice President and Segment Leader, Small Business, for CT Corporation, a Wolters Kluwer business. “Although regulations often draw a significant level of attention from those parties that are impacted, the beneficial ownership reporting requirement has seemed to remain under the radar, in spite of an effective date now only one month away.”
“Wolters Kluwer is doing our utmost in helping address the growing sense of awareness and urgency for all market participants that will be impacted by the new requirements,” he added. “Now is the time for those entities to take action in beginning to prepare to meet these reporting requirements.”
Only three percent of respondents indicated they were 100% prepared to comply with the CTA beneficial ownership information (BOI) reporting rule. Another 33% of respondents were unsure whether their organizations were subject to CTA beneficial ownership filing requirements.
While companies that exist before January 1, 2024 have until January 1, 2025 to file their BOI details, entities formed after January 1, 2024 have 90 days to file as a result of a recent amendment submitted by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) to extend that period from 30 days. Regardless, the regulatory requirements are complex and will require advanced preparation and time to support, impacting nearly 33 million businesses in 2024.
“FinCEN estimates that approximately three hours are needed to complete a filing,” May noted. “For those organizations—or advisory service firms with multiple entities under their purview—that translates into a significant commitment of time and the potential need for expert solutions to ensure compliance with the new regulation requirements.”
In polling attendees on the anticipated number of entities for which they would be required to file BOI details, 41% were unsure of the number of filings they would be required to submit.
Wolters Kluwer has been fully engaged in following developments around the new beneficial ownership rule taking effect January 1, 2024. It has created a range of helpful resources such as an easy-to-use self-guided eligibility quiz, webinar presentations, and content to ensure impacted entities are able to effectively prepare for and navigate the new requirements within the target timeframe to meet their compliance obligations. More information is available on its CTA Resources page.
