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What You Need to Know About the Corporate Transparency Act

By May 14, 2024Legal

In 2021, Congress enacted the Corporate Transparency Act (CTA) to curb illicit finance activities, such as money laundering, tax evasion and other illegal activities. The federal agency charged with enforcing the CTA is the Financial Crimes Enforcement Network (FinCEN). 

Who’s Affected by the CTA 

The CTA requires that companies doing business in the United States report mandated information about the people who own or control them, including beneficial owners and applicants. The CTA applies to most small- to mid-sized companies doing business in the U.S.; however, there are a few exempt companies, including large operating companies with more than 20 full-time U.S.-based employees and more than $5 million in gross sales or receipts from U.S.-based sources. 

Requirements Under the CTA 

Eligible small businesses, also called Reporting Companies, will need to furnish the following information: 

  • Full legal name of the company. 
  • The business’s physical address (no P.O. boxes or business advisors’ addresses). 
  • State or tribal jurisdiction where the company was formed or first registered. 
  • Taxpayer identification number and identifying document, such as an Articles of Incorporation or Organization. 

Beneficial owners must also report information about themselves. Beneficial owners include any individuals who exercise substantial direct or indirect control over a Reporting Company or who own or control at least 25% of the Reporting Company. Substantial control means having a senior management position, substantial influence, or decision making authority. 

Beneficial owners must supply their: 

  • Full legal name and date of birth. 
  • Physical home address. 
  • U.S. driver’s license or passport (a photocopy). 

What is the Deadline? 

As of January 1, 2024, FinCEN began accepting beneficial ownership information reports at its website 

A Reporting Company created or registered to do business before January 1, 2024, must file its initial beneficial ownership information report by January 1, 2025. Beneficial owners may incur penalties if reporting requirements are not met. 

Reporting Companies that need help understanding their reporting obligations are advised to consult with professional service providers such as lawyers or accountants. 

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