New Corporate Transparency Act (CTA) Reporting Requirements

We would like to remind you of the new Corporate Transparency Act (CTA) reporting requirements that your company (ies) may be required to file by January 1, 2025.

Corporate Transparency Act (CTA)

Please be advised that your entity may have a filing obligation with the Federal Government. You may need to file a Beneficial Ownership Information Report (BOI Report) with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

What is the CTA?

The CTA imposes new federal reporting obligations on certain business entities, including the need to disclose information about beneficial owners. It is considered one of the most significant anti-money laundering reforms in recent times and aims to align the United States with international standards in these areas. As part of the National Defense Authorization Act for Fiscal Year 2021, the CTA became law on January 1, 2021. This legislation was passed to fight against money laundering and terrorism financing.

Reporting to FinCEN

All required information under the CTA needs to be reported to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. FinCEN’s mission is to safeguard the financial system from illicit use, combat money laundering, and promote national security through the collection, analysis, and dissemination of financial intelligence.

Does this apply to your company?

The CTA likely applies to you if your company is a corporation, limited liability company, limited partnership, or a similar entity. Sole proprietorships, general partnerships, non-profits, banks, utility companies, accounting firms, investment firms, and insurance companies are generally exempt.

Note that starting Jan. 1, 2024, the majority of US small businesses, including any existing, amended, or new corporation, Limited Liability Company, will be subject to new reporting requirements under the CTA and must submit beneficial ownership information with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to disclose beneficial owners over 25% on their portal.
Existing reporting companies – A business that does not fall under one of the 23 exemptions will have one-year (until January 1, 2025) to file the initial Beneficial Ownership Information (BOI) reports.
Updates: In March of 2024, Alabama contested the constitutionality of CTA and the plaintiff won the case. Given the infancy of this program and potential future pushback by other states, it may be practical for existing reporting entities established prior to January 1, 2024, to hold off on filing the BOI reports until the latter part of 2024 in case there are changes to the requirement.
You may want to inquire with your business attorney regarding how this may impact your company. Certain law firms also assist their clients with these filings should you require.
For more information see our previous blog regarding CTA: https://www.newburg.com/corporate-transparency-act-establishes-expanded-reporting-requirements/

BOI Report Filing Process

To file the BOI Report, please login to https://www.fincen.gov/boi and follow the instructions and you will need to provide a copy of your license/passport. See below for a sample BOI report.

BOI Demo Video: Five-Minute Demo: How to File a Beneficial Ownership Information (BOI) Report. This video walks through how to report beneficial ownership information (BOI) using the Financial Crimes Enforcement Network (FinCEN)’s E-Filing System.

Important Deadlines

Entities formed or registered before January 1, 2024, have until January 1, 2025. Those entities formed or registered during 2024 need to report within 90 days from their date of formation.

From 2025 onwards, any new entity created has 30 days to comply.

Penalties for Non-Compliance

Significant penalties await those who do not comply with the CTA’s regulations. A person who willfully violates beneficial ownership reporting requirements may be subject to civil penalties of up to $591 for each day that the violation continues, as well as criminal penalties of up to two years imprisonment and a fine of up to $10,000.

Reporting Company Report

“Reporting Companies” are required to file reports that include any information regarding the company and any individual who is a “Beneficial Owner”. The information that must be included in the “company report” includes:

Legal name and trade name such as DBAs (doing business as)
Street address where the company’s principal place of business is located
State of formation
Tax identification number
An identifying document from an issuing jurisdiction such as a certification of incorporation or certificate of formation in the image of that document.

“Beneficial Owner”

If you are a 25% owner, either individually or as trustee, or if you have substantial control over the Reporting Company (such as the Manager of an LLC, the officer of a corporation, or the general partner of a limited partnership), then you are a “Beneficial Owner” and you must provide the following personal information to the Reporting Company which then files a “Beneficial Owner Report”:

Full Legal Name;
Date of birth;
Residential street address;
Business street address; and,
A unique identifying number from one of the following documents:
- A non-expired passport issued by the United States Government;
- A non-expired identification document issued to the individual by a State, local government, or Indian tribe for the purpose of identifying the individual;
- A non-expired driver’s license issued to the individual by a State, or
- A non-expired passport issued by a foreign government to the individual, if the individual does not possess any of the documents described in paragraph (a), (b) or (c), and,
An image of the document from which the unique identifying number in subsection (c)(5) was obtained which include both the unique identifying number and photograph of the individual in sufficient quality to be legible and recognizable (collectively referred to as “CTA Information”).