Corporate Transparency Act

This week we wanted to take the opportunity to remind you that the Corporate Transparency Act (“CTA”) will go into effect on January 1, 2024. The CTA requires both new and existing companies covered by the law to report “beneficial ownership” as described herein. The CTA’s new reporting requirement for beneficial ownership information (BOI) refers to identifying information about certain individuals directly or indirectly owning or controlling a corporate entity.

The CTA reporting requirements will apply to corporations, limited liability companies, and other entities that fall within the Act’s definition of a “reporting company”.

According to the CTA, reporting companies will fall into two categories:

(1) domestic reporting companies and (2) foreign reporting companies.

1. Domestic reporting companies: These will include corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
2. Foreign reporting companies: These will include entities (inclusive of corporations and limited liability companies) formed under the laws of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.

The beneficial ownership information will be collected and accessed through the Financial Crimes Enforcement Network (FinCEN), a branch of the U.S. Department of the Treasury. For your information, the CTA was originally passed in 2021 by Congress on a bipartisan basis. The stated goal of the CTA is to enhance the U.S. government’s efforts to make it harder for bad actors to hide and/or benefit from their ill-gotten gains by use of shell companies or other opaque ownership structures. It is our understanding that BOI will be stored in a secure, non-public database using rigorous information security methods and controls typically used by Federal government agencies to protect non-classified, yet sensitive information systems at the highest security level. FinCEN will permit access to BOI only to Federal, State, local, and Tribal officials on a bipartisan basis, and will work closely with those authorized to access BOI to ensure they understand their roles and responsibilities. The use of such information will be solely for authorized purposes, security, and confidentiality for assisting FinCEN.

REPORTING DEADLINES:

1. A reporting company created or registered to do business before January 1, 2024, will have one year, or until January 1, 2025, to file its initial beneficial ownership information report.
2. A reporting company created or registered on or after January 1, 2024, will have 30 days to file its initial beneficial ownership information report. This 30-day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.

Registration will be available through an electronic secure filing system via FinCEN’s website, which system is still under development and anticipated to be up and running prior to the first filing deadline. No cost or fee will be required with the BOI registration.

A link to the FinCEN’s website where your clients can submit their BOI registrations once the system is activated is set forth below:
https://www.fincen.gov/boi

REPORTABLE INFORMATION FOR BENEFICIAL OWNERS INCLUDES:

i. The full legal name and any trade name or “doing business as” name of the Reporting Company;

ii. A complete current address;

iii. The State, Tribal, or foreign jurisdiction of formation or registration of the Reporting Company; and

iv. The IRS Taxpayer Identification Number (including Employer Identification Number