Understanding the Corporate Transparency Act (CTA)

Effective January 1, 2024, the CTA requires a broad spectrum of entities to disclose their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN). This federal mandate aims to enhance transparency and curb illicit financial activities.

Who Must Report:

• Most corporations, LLCs, and similar entities, both domestic and foreign, that are registered to operate within the U.S.
• Exemptions exist for twenty-three classes of entities, such as governmental bodies, banks, and large operating companies, among others. The specifics of these exemptions can be complex; consulting with a legal expert is advised.

Disclosure Requirements:

• Beneficial Owners: Entities must disclose the identity of individuals with substantial control or those owning at least 25% of the entity and must provide details including legal name, date of birth, address, and an identifying number (e.g., SSN).
• Control Definitions: “Substantial control” includes serving as a senior officer, having the authority to appoint or remove certain officers or directors, having authority to make significant business decisions, or other forms of major influence.

How and When to File:

• Use the Beneficial Ownership Secure System at FinCEN.gov for filing.
• Existing Entities: File by January 1, 2025, if registered before January 1, 2024.
• New Entities Registered in 2024: File within 90 days of registration notice.
• Post-2025 Entities: File within 30 days of registration notice.

Consequences of Non-Compliance:

Failure to file correctly and on time can result in daily fines of $500, up to $10,000 total, and/or up to two years of imprisonment.

For comprehensive guidance, visit FinCEN’s BOI page at https://www.fincen.gov/boi and the  compliance guide at https://www.fincen.gov/boi/small-entity-compliance-guide.

For filing assistance or more information, contact Harris Sliwoski at firm@harris-sliwoski.com.