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Corporate Transparency Act

Updated 12/12/24

On December 3, the U.S. District Court for the Eastern District of Texas entered a preliminary injunction suspending enforcement of the Corporate Transparency nationwide. As of now, it’s not required to be submitted. This may change. The FinCEN website has this update online:

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

Updated 3/14/24

An Alabama court recently ruled that the CTA was unconstitutional. (National Small Business United v. Yellen, D.C., Ala.).
The government has appealed this decision. In the meantime, firms with Dec. 31 reporting due dates may want to wait until closer to year-end to file.

Updated 12/26/2023

Effective January 1 2024

If you own or control a limited liability company (LLC) or corporation, you are likely required to submit certain information to the federal government about your business entities, their beneficial owners, and the individuals who manage and control those entities. We are reaching out to help you better understand the CTA and your potential obligations. 

 What is the Corporate Transparency Act? 

The CTA is a law that requires business entities it identifies as “reporting companies” to disclose specific information about the company, its owners, and those who control the entities to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Under the CTA, a “reporting company” is a corporation, limited liability company (LLC), or other similar entity created by filing a document with any state’s secretary of state or an entity that is otherwise registered to do business in the United States. The following information about the “reporting company” must be reported: 

  • the company legal name, and any trade name or “doing business as” name
  • street address of the principal place of business 
  • jurisdiction in which the business was formed 
  • tax identification number (EIN)

The reporting company must also provide the following information about its “beneficial owners,” (Beneficial Ownership Information/BOI) defined as persons who hold 25 percent or more ownership interest in the reporting company or who exercise “substantial control” over the reporting company, such as LLC managers, or corporate officers or directors. BOI includes:

  • full legal name   
  • date of birth  
  • current address 
  • unique identification number from an “acceptable identification document”, such as Social Security number or a state-issued driver’s license number  

Reporting companies created on or after January 1, 2024, must provide the same information about the company’s applicant (i.e., the person who files the creation documents for the reporting entity).  

The CTA calls for significant civil and criminal penalties, such as a fine of $500 for every day out of compliance (with a maximum limit of $10,000) and up to two years in prison for intentional violations. Compliance with the CTA is not a one-time event.  As beneficial owners move or change, the CTA requires that the information previously disclosed be updated to reflect any changes to the structure of the reporting company, subject to the same penalties for noncompliance. 

Does the CTA impact you? 

The CTA targets smaller business entities because larger businesses are already regulated with laws that require similar disclosures. If you own a small business or are a member or shareholder of an entity (owning 25 percent or more) or are a manager, director, or officer of an entity, you are likely subject to this act unless the business falls under one of the stated exemptions. Your business may be exempt from the reporting requirements if it employs more than 20 full-time employees, filed a return showing more than $5 million in gross receipts or sales, and has a physical office located within the United States. Other exemptions apply, but they are primarily applicable to industries that are already heavily regulated. 

If you own or operate an entity, such as a limited liability company or corporation, for example, to hold real estate or protect assets or operate a business venture, you are likely required to comply with the CTA. This applies even if you don’t have to file a tax return for the particular LLC or corporation.

What do you have to do to comply with the CTA? 

To comply with the act, you should gather and timely submit the required information for all reporting companies that you are a beneficial owner of, as well as the information for any additional beneficial owners. Entities created before January 1st, 2024, must submit the required reports by December 31st, 2024. A reporting company created on or after January 1st, 2024, and before must file its initial report within 90 days of the entity’s creation. Lastly, any changes should be reported within 30 days.

Online filing and updates available at FinCEN.gov https://www.fincen.gov/boi

Instructions here: https://boiefiling.fincen.gov/help