The Corporate Transparency Act (“CTA”) was enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act. The CTA includes significant reforms to anti-money laundering laws and is intended to help prevent and combat money laundering, terrorist financing, corruption, and tax fraud. The CTA establishes a beneficial ownership reporting requirement for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States. The beneficial ownership reports must be filed with the US Treasury’s Financial Crimes Enforcement Network (FinCEN). Businesses formed before January 1, 2024 have up to one year to complete the filing.
Here are five essential things to know:
Who has to report?
Most active corporations, LLCs, and other businesses formed by filing a document with a Secretary of State’s office in the United States. Contact FinCEN to confirm whether your business is required to report.
Who does not have to report?
Publicly traded companies, banks and other financial institutions, tax-exempt nonprofits, public utilities, and some large businesses. These are already subject to other regulatory requirements. (See the Small Business Compliance Guide, Chapter 1.2 for the list of exempted entities.)
How do I report, and whose information?
Reporting companies will report beneficial ownership through FinCEN’s website, only available for reporting on or after 1/1/ 2024. There is no fee for submitting this report.
A Beneficial Owner is any individual who either exercises substantial control over a company or owns or controls at least 25% of the ownership interest. If a business entity owns or controls at least 25% of a reporting company, then its Beneficial Owner(s) must also be reported.
Company Applicants are individuals who, after 1/1/2024, directly submitted the formation or registration document for a company or were primarily responsible for that submission. There may be up to two Company Applicants.
What is reported?
Company legal name and current principal place of business street address in the U.S.
Any assumed business name (DBA) used by the company.
Taxpayer identification number (TIN or EIN)
Each Beneficial Owner’s name; birthdate; residential street address; and an identifying number with an image of an acceptable ID (e.g., driver’s license or passport).
Each Company Applicant’s name; birthdate; residential street address, (applicants whose business is submitting registration documents may use their business address); and an identifying number with an image of an acceptable ID (e.g., driver’s license or passport).
There is no fee, and this is not an annual report. Only updates and corrections are necessary.
When do I report?
If your company was created or registered prior to 1/1/2024, you have until 1/1/2025 to report.
Companies created on or after 1/1/2024 must report within 90 days.
Failure to report is punishable with a civil penalty of up to $500/day.
Please contact FinCEN for the most up to date information and answers to your questions.