What is the Corporate Transparency Act?
Beginning on January 1, 2024, many companies (LLCs, PLLCs, corporations, limited partnerships, etc.) in the United States will have to report information about their beneficial owners, i.e., the individuals who ultimately own or control the company. They will have to report the information to the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury. This newly passed law is called the Corporate Transparency Act (CTA).
What is the purpose of the Corporate Transparency Act?
To enhance national security, intelligence, and law enforcement efforts to combat money laundering, terrorism financing, and other illicit activities.
Who will see my information?
- The CTA does not authorize public disclosure of beneficial ownership.
- FinCEN can disclose the information to other law enforcement agencies as part of a criminal or civil investigation, with court approval.
- A financial institution with the consent of the reporting company, to facilitate compliance of the institution with customer due diligence.
When Do I Report?
- Reports will be accepted starting on January 1, 2024.
- If your company was created or registered before January 1, 2024, you will have until January 1, 2025, to report.
- If your company was created or registered on or after January 1, 2024, and before January 1, 2025, you must report within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
- If your company was created or registered on or after January 1, 2025, you must file your report within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
- Any updates or corrections to beneficial ownership information that you previously filed with FinCEN must be submitted within 30 days.
What exactly are you reporting?
- The entity’s (company) name, as well as any trade names or DBAs
- Business street address
- Jurisdiction of formation
- Taxpayer Identification Number, or taxpayer number in home jurisdiction (non-US entities)
- A Reporting Company must file an updated statement if there is a change to any reported information, including a change of address or name change.
What does a Reporting Company report about Beneficial Owners?
- Full legal name
- Date of birth
- Current residential address
- A unique identification number (such as a driver’s license, identification card, or passport number)
- A digital copy of the identifying document
Who is a Beneficial Owner?
- An individual who directly or indirectly through any contract, arrangement, understanding, relationship, or otherwise EITHER Exercises Substantial Control over the Reporting Company; or owns or controls at least 25% of the ownership interests of the Reporting Company.
How much does the reporting cost?
- Financial Crimes Enforcement Network does not charge a reporting fee.
What happens if you don’t do the reporting?
- You could be liable for a civil penalty of $590 per day the violation continues or is not remedied and,
- could be fined no more than $250,000, or imprisoned for 10 years, or both or,
- if violating another law of the United States or any illegal activity involving more than $100,000 over a 12-month period, a fine of no more than $500,000, imprisoned for no more than 10 years, or both
Can my CPA file this for me?
- You have to check with your CPA. Most CPA firms don’t do the filing.
What happens after we do the filing? Do we have to do this every year?
- You do not have to file every year!
- You must update your report when something changes within 30 days
What is the FinCEN ID?
- A FinCEN ID, or Financial Crimes Enforcement Network ID, is a unique 12-digit number issued by the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the U.S. Department of the Treasury.
- FinCEN will issue a FinCEN ID to individuals who provide their Beneficial Owner Information
- Each FinCEN ID is specific to the individual or company and only one can be obtained.
- While there is no requirement to obtain a FinCEN ID, it can simplify the reporting process. For example, reporting companies can only list the name of the beneficial owner and their FinCEN identifier number instead of listing all the information for a specific beneficial owner and uploading an image of their identifying document.
Are you a reporting company?
- Have you filed an entity with the SOS or an Indian tribe? If yes, then you must submit the reporting…but does an exemption apply? If yes, then you don’t have to submit the reporting…if no exemptions apply then yes you must submit the reporting.
- Some examples of exempt companies are banks, brokers and dealers in securities, inactive entities, etc.
Can I submit the report myself or do I have to hire an attorney?
- You can submit the report yourself. However, if you need help identifying whether your company is exempt from reporting and who the beneficial owners are, then we are here to help you.
Please contact our law firm to schedule and discuss your specific situation.
Office: (817) 226-1100
