Contact:
Alison Arden Besunder
212-695-8100, ext. 289
[email protected]

Aaron Boyajian
212-695-8100, ext. 258
[email protected]

The Corporate Transparency Act (CTA) (www.fincen.gov/boi) is now in effect, bringing forth pivotal changes in reporting obligations for diverse entities. At Goetz Fitzpatrick LLP, we recognize the intricate landscape this legislation introduces and are committed to guiding our clients through its nuances. The CTA mandates beneficial ownership reporting, aiming to bolster transparency and combat financial misconduct. If your entity falls within the scope of this regulation or requires assistance with the Beneficial Ownership Information (BOI) report, our adept team stands ready to assist. Reach out to us for support and guidance on CTA compliance.

What Is the Corporate Transparency Act: Your Comprehensive Compliance Guide

The Corporate Transparency Act (CTA), implemented on January 1, 2021, under the National Defense Authorization Act, substantially reforms anti-money laundering laws. Its primary aim is to curb money laundering, terrorist financing, corruption, and tax fraud by mandating beneficial ownership reporting for various entities operating in the United States.

Key Points:

Effective Dates: The reporting obligations came into force on January 1, 2024. Entities formed before this date have until January 1, 2025, to comply.

Filing Requirements: Filing deadlines differ based on entity formation dates, with a grace period provided for entities established in 2024.

Reporting Companies: Various domestic and foreign entities, known as reporting companies, are mandated to submit beneficial ownership information to FinCEN.

Exemptions: Several categories, such as banks, tax-exempt entities, and certain partnerships, are exempt from reporting. A “large operating company” is also excluded based on specific criteria.

Tax-Exempt Entities: Tax-exempt entities must monitor their status; if they lose their exemption, they need to report within 180 days.

Information Required: Details about the company, beneficial owners, and company applicants are needed, including identification documents, such as a registration certificate.

Submission Method: Reports must be submitted electronically through FinCEN’s Beneficial Ownership Secure System (BOSS).

Access and Confidentiality: The disclosed information is accessible to authorized recipients for defined purposes, with security and confidentiality protocols.

Updates and Corrections: Reporting companies must promptly update or correct any inaccuracies or changes within specific time frames.

Penalties: Non-compliance, including false reporting, can result in civil or criminal penalties.

FinCEN Identifier: While not mandatory, a unique FinCEN identifier may be obtained and utilized to streamline reporting processes.

Conclusion:

The CTA’s implementation imposes stringent reporting requirements on various entities, aiming to enhance transparency and combat financial crimes. Understanding these obligations and adhering to reporting timelines and accuracy is crucial to avoid penalties and ensure compliance with the law. In all instances, businesses and entities should familiarize themselves with the law’s provisions and seek legal counsel to ensure adherence to regulatory requirements.

For entities which Goetz Fitzpatrick forms for its clients after January 1, 2024, we will work to guide them through the CTA compliance process.  For entities which were formed prior to January 1, 2024, you may be contacted by our office to assist in the CTA compliance process, however, if not, we strongly recommend that you contact us to assist you in the CTA compliance process so that you avoid potential non-compliance and the rigorous penalties which accompany non-compliance.

Goetz Fitzpatrick has been practicing law throughout the New York Metropolitan area and The Hamptons, since 1967. The firm has deep expertise in Construction and Real Estate, as well as Corporate, Bankruptcy, Trust & Estates and Labor & Employment. The firm’s office is located at One Penn Plaza, Suite 3100, New York, NY 10119, Telephone 212 695 8100.

Author

Alison Arden Besunder

Alison Arden Besunder, Esq. is Chair in the Trusts & Estates Planning and Fiduciary Litigation group at Goetz Fitzpatrick. She has extensive experience and focuses her practice in the areas of Trusts & Estate Planning, Guardianship, Estate Litigation, Commercial Litigation, Elder Law, and Business Succession Planning.

LEARN MORE >

Author

Aaron Boyajian

Aaron Boyajian concentrates on business law and transactions, specializing in real estate and closely-held companies.

LEARN MORE >

Major Impact On All Nys Private Construction Contracts As Nys Governor Hochul Signs Law To Mandate 5% Maximum Retainage On All Private Construction Contracts And Payment Of Retainage Can Now Be Sought Upon Substantial Completion

On November 17, 2023, NYS Governor Kathy Hochul signed into law significant modifications to General Business Law §§756-A and 756-C which will have a great impact on construction agreements for private projects.  Specifically, GBL §756-A was amended to now provide that contractors and subcontractors may submit a final invoice for work performed and the release of retainage upon substantial completion of the project.   Also, GBL §756-C was amended to provide that five percent (5%) of the contract sum is the maximum allowable retainage that can be withheld from the contractor or subcontractor (as the case may be), during the project.

Retainage Must Now Be Released Upon “Substantial Completion”

Prior to the effective date of the new law, which is November 17, 2023, GBL §756-A entitled a contractor or subcontractor to submit a final invoice for payment “upon the performance of all the contractor’s obligation under the contract…”  This language was generally taken to mean final completion – that is, after all punch list work is complete and all work has been approved by owner, architect, or both.  Among the purposes of GBL-756-A was so the owner could have some assurance that the contractor would return to the project to complete punch list work, and to secure the owner (to some degree) for defects, costs, and possible back charges that it might have against the contractor at the end of the project.  This owner-driven protection, however, often frustrated many contractors as owners sometimes withheld retainage for an unreasonable amount of time and leveraged it to extract additional work from the contractor without additional payment.

Now, the newly passed modification to GBL §756-A.2 drastically changes the above-quoted statutory language and provides that:

A contractor shall be entitled to submit a final invoice for payment in full upon reaching substantial completion, as such term is defined in the contract or as it is contemplated by the terms of the contract. 

(Emphasis added).

Most people who work in construction and development, including construction law practitioners, commonly recognize “substantial completion” to mean when the property can be used for its intended purpose and that often correlates to when the temporary certificate of occupancy is issued by the governmental agency with authority over such matters.

The language in the newly passed legislation must be taken into consideration during the negotiation and drafting of the construction contract so there is no misunderstanding of the term “substantial completion” and when the contractor is entitled to receive its retainage.

Retainage is Now Limited to 5%

GBL 756-C used to provide permit the parties to agree on a “reasonable amount” of retainage, and what was “reasonable” was often negotiated by the parties but usually landed at 10%.  Not anymore!

As of November 17, 2023, GBL §756-C mandates that “an owner may retain no more than five percent per annum of the contract sum as retainage.”

While the 5% difference between the usual (now unlawful) 10% and the newly legislated 5% maximum retainage may not appear much, the delta becomes more obvious the larger the project.

For owners, it is a loss of a certain level of security and leverage; for contractors, it means more of the contract sum and payment sooner rather than later, which is the stated purpose of the new legislation.

Goetz Fitzpatrick has been practicing law throughout the New York Metropolitan area and The Hamptons, since 1967. The firm has deep expertise in Construction and Real Estate, as well as Corporate, Bankruptcy, Trust & Estates and Labor & Employment. The firm’s office is located at One Penn Plaza, Suite 3100, New York, NY 10119, Telephone 212 695 8100.

Author

Gerard Strain

Gerard S.

LEARN MORE >