Are You Prepared for CTA Reporting?

The Corporate Transparency Act (“CTA”) took effect on January 1, 2024. The CTA contains a new corporate reporting requirement that requires corporations, limited liability companies, and any other entity created by the filing of a document with a secretary of state or any similar office in the United States to file a Beneficial Ownership Information Report (“BOIR”) with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”).

Does my company need to report its beneficial owners?

Businesses formed on or before 2023 need to report in 2024, and businesses formed in 2024 must report within 90 days of formation.

You need to report if your entity:

  • Was created by the filing of a document with a secretary of state or a similar office under the law of a State or Indian Tribe or formed under the law of a foreign country and registered to do business in the U.S. by the filing of a document with the secretary of state or a similar office under the laws of a State or Indian Tribe, and
  • Does not qualify for one of the 23 exemptions.

Most legal entities with fewer than 20 employees and $5M in gross receipts will need to report their beneficial owners’ and company applicants’ personal information to FinCEN. In general, beneficial owners are the direct or indirect owners of 25% or more of the equity of a business entity. Individuals who “control” the entities, such as officers, directors, managers, or general partners, are also included in the CTA’s definition of beneficial owners.

Exemptions to the filing requirement include financial institutions, government authorities, public utilities, publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.

What are the penalties for non-compliance?

The CTA carries stiff penalties for non-compliance. Failure to comply with the CTA may result in civil and/or criminal penalties, including civil penalties of up to $500 for each day the violation continues, and criminal penalties, including imprisonment for up to two years and/or a fine of up to $10,000.

When and how do I file?

Reporting companies should report beneficial ownership information via FinCEN’s website: Summit Law can also assist in reporting compliance.

The deadline for filing a BIOR is:

  • January 1, 2025, for entities existing before January 1, 2024.
  • 90 calendar days from the date of formation for entities formed on or after January 1, 2024, and before January 1, 2025.
  • 30 calendar days from the date of formation for entities formed on or after January 1, 2025.

How often do I have to report?

You only have to report your beneficial ownership to FinCEN once unless you need to change or correct information. For example, if you sell part of your company or make any other changes to your entity’s beneficial ownership, you must file an update no later than 30 days after the change date. You may find additional guidance and materials here:

How can Summit Law help?

You can file a BIOR report yourself, via FinCEN, or we can assist you with the filing via our corporate compliance service. If you’d like assistance with your CTA filings, please contact Jennifer Parrish and Ada Danelo.

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