Corporate Transparency Act – Filing Requirement

The Corporate Transparency Act requires small and medium sized businesses created by filing paperwork with a Secretary of State (Corporations, LLCs, LLPs etc) to report identifying information by 12/31/2024 to the Financial Crimes Enforcement Network (FinCEN).

• Some exceptions include charities or companies with 20 or more employees, and $5M in annual revenue.

New Filing Obligations for the Corporate Transparency Act

• Purpose: to create a national database of companies in the U.S. that identifies the individuals behind those companies.
• Intended to combat money laundering, terrorism, tax evasion, and other financial crimes
• Closely held businesses will more than likely be required to file with FinCEN, there are several exceptions however (32 types of business are exempt in total).
• Estimated that 32 million entities will have to file with FinCEN.

What must be included in filings:

• Company Legal name and any DBA
• Tax Identification Number
• Image of identifying document from an issuing jurisdiction

Any companies required to file with FinCEN must report who their “Beneficial Owners” are

• • Beneficial Owner
    • Own at least 25% of an entity, or “exercise substantial control over a reporting company”. Ex. a managerial position.
    • Need to give the reporting entity their full legal name, DOB, home address, copy of US passport or state driver’s license.

Filing Timeline:

• All entities that existed before 2024, unless specifically exempt will have to file by 12/31/2024. 
• Any new entities will have to file within 30 days of the formation.
• Any changes in ownership (address, took a new last name, new owner, owner leaving etc.) will have to be filed within 30 days.

Penalties for non-compliance are punitive (~$600/day per infraction, potential jail time)

If you believe you may be impacted by this legislation, please contact your attorney or CPA to discuss your filing requirements.