The Corporate Transparency Act is effective as of January 1, 2024. Understand the basics and if and how the CTA will apply to you and your business.

What is the Corporate Transparency Act (CTA)?

A law enacted in 2021 to require reporting of individual owners of corporate entities to FinCEN, the Financial Crimes Enforcement Network. The CTA requires information about Reporting Companies and the individuals that ultimately own and control them. CTA requirements are intended to help prevent and combat money laundering, terrorist financing, corruption, tax fraud and other illicit activity, while minimizing the burden on entities doing business in the US.

How do I know if I need to file under the CTA?

ALL Companies (LLCs, partnerships, and corporations) are required to file unless they are Exempt Companies. In general, Exempt Companies currently file information with a regulatory entity, are tax exempt or inactive. (See “Exempt Companies” on chart below.)

The CTA requires BOI (Beneficial Owner Information) with regard to Reporting Companies as defined in the Rule. If you own 25% or more or, or direct or control an LLC, partnership or corporation that is a “Reporting Company”, a FinCEN BOI Filing will be required.

What information has to be filed?

Information about the Companies and the individuals who are beneficial owners, who exercise “substantial control” over the Reporting Companies, and beginning in 2024, the “Company Applicants” — individuals who file or direct filings to form and/or register Reporting Companies.

How should I respond to notices that I receive about CTA reporting?

Don’t. FinCEN does not send unsolicited requests. Note that there are scammers sending fraudulent communications to individuals and entities that may be subject to the reporting requirements of the CTA. FinCEN cannot accept reports before January 1, 2024.

Who will have access to BOI Reports? Will they be public?

No, BOI information will be provided to Federal, state, and foreign law enforcement and regulatory agencies, pursuant to certain protocols included in the CTA. BOI may also be shared with financial services firms with consent for KYC and due diligence purposes.

What if I am an attorney and I fit the definition of “Applicant”? Does my personal information need to reported?

No, not for Reporting Companies formed prior to January 1, 2024, but YES, in the future, to the extent you create and/or file (or direct the filing of ) documents to create a reporting company beginning January 1, 2024.

Download the pdf version here

If you have questions about the CTA and its application to you and/or your business, the attorneys of Cohen & Buckmann can help. Contact Lauri London: lauri@cohenbuckmann.com