Corporate Transparency Act Compliance—Legal Deadline Approaching

Your company may need to comply with a new federal filing requirement. The Corporate Transparency Act (“CTA“) took effect on January 1, 2024. Here is a summary of what this new federal law requires.

The CTA requires every reporting company that is not exempt to file a beneficial ownership information report (“Report“) with FinCEN – the Financial Crimes Enforcement Network of the U.S. Treasury. You may also see this referred to as “BOI.” The Report must include five certain items of information for each Beneficial Owner of your Company. Upon request, we can collect from you the documents and information we need to help you determine whether your company needs to file a FinCEN Report and, if so, who are the Beneficial Owners to be identified in that report. You will then be responsible for preparing your Report and filing it with FinCEN by the applicable deadline.

The CTA imposes a $500 per day fine on reporting companies that fail to file on time. In addition, a willful failure to file can be punished as a felony. If you have any questions, please contact this law firm.

Because the CTA is a new law that will require an estimated over 30 million U.S. businesses to file a Report that they have never filed before, there is a great deal of concern in the market.

The CTA applies to any corporation, limited liability company (LLC), or other legal entity formed by the filing of a document with a Secretary of State (or any entity formed outside the U.S. that is registered to do business in the U.S. by filing a document with a Secretary of State) (each, a “reporting company“). Some reporting companies are exempt from the CTA’s requirements and the resources cited below can help you determine if your company may be exempt.

In a nutshell, the CTA will require every non-exempt reporting company in existence prior to January 1, 2024, to file its initial Report with FinCEN by January 1, 2025.

Any reporting company formed on or after January 1, 2024, and before January 1, 2025, will need to file its first Report within 90 calendar days after the date of formation (or the date of registration, in the case of a foreign reporting company).

Reporting companies created (or registered or registered to do business in the U.S.) 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 Reports with FinCEN.

FinCEN began accepting reports on January 1, 2024. Every non-exempt reporting company will need to identify its beneficial owners and, for each of them, provide their (i) full legal name; (ii) residential address; (iii) date of birth; (iv) a “unique identifying number” (such as a passport or U.S. driver’s license); and (v) an image of the document that provides the unique identifying number.

Note that reporting companies formed (or registered to do business in the U.S.) on or after January 1, 2024, will also need to provide similar information for the entity’s “company applicant.”

Importantly, after a reporting company files its initial Report, the reporting company will need to amend that Report within 30 calendar days after any change in its beneficial owners or their reported information. As a result, every reporting company should review its constituent documents and adopt a compliance policy to ensure that the company is able to comply with this requirement.

A source of background information is the Small Entity Compliance Guide published by FinCEN to educate the market.

If you would like assistance with your beneficial ownership information report, click here to contact Guala Law Firm.

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