Corporate Transparency Act
History
The Corporate Transparency Act was passed by Congress in 2020 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 Final Rule (184 pages) was adopted in September 2023. It becomes effective January 1, 2024. Preparations should be made now to ensure your business will meet its requirements under the new law. The FinCEN reports are required beginning January 1, 2024.
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Who Will have access to this information?
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FinCEN will permit Federal, State, local, and Tribal officials, as well as certain foreign officials who submit a request through a U.S. Federal government agency, to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. Financial institutions will also have access to beneficial ownership information in certain circumstances, with the consent of the reporting company. Those financial institutions’ regulators will also have access to beneficial ownership information when they supervise the financial institutions.
FinCEN is developing the rules that will govern access to and handling of beneficial ownership information. Beneficial ownership information reported to FinCEN will be stored in a secure, non-public database using rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level. FinCEN will work closely with those authorized to access beneficial ownership information to ensure that they understand their roles and responsibilities to ensure that the reported information is used only for authorized purposes and handled in a way that protects its security and confidentiality.
Companies that are required to report are called reporting companies. There are two types of reporting companies:
1.Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
2.Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
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Reporting companies that are exempt:
1.businesses with at least 20 full time employees
2.greater than $5m in gross receipts or revenue
3.Publicly traded, public utilities
4.Non-profit organizations
Information a reporting company have to report about itself?
A reporting company will have to report:
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Its legal name;
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Any trade names, “doing business as” (d/b/a), or “trading as” (t/a) names;
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The current street address of its principal place of business if that address is in the United States (for example, a U.S. reporting company’s headquarters), or, for reporting companies whose principal place of business is outside the United States, the current address from which the company conducts business in the United States (for example, a foreign reporting company’s U.S. headquarters);
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Its jurisdiction of formation or registration; and
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Its Taxpayer Identification Number (or, if a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of the jurisdiction).
A reporting company will also have to indicate whether it is filing an initial report, or a correction or an update of a prior report.
Who must File
Deadlines
The deadline for filing for any company established in 2024 is 90 days from the filing date. For already existing company entities established prior to January 1st 2024, the deadline is December 31st, 2024.
A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
Penalties
As specified in the Corporate Transparency Act, a person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues.
That person may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000. Potential violations include willfully failing to file a beneficial ownership information report, willfully filing false beneficial ownership information, or willfully failing to correct or update previously reported beneficial ownership information.
Start Your Filing now
Follow the following link to begin your submission to the United States Department of Treasury Financial Crimes Network. This is a one-time requirement. If the ownership changes, then it will need to be filed again to reflect the changes.
Click the following link below to go to the encrypted submission form.