What is the Corporate Transparency Act (CTA), and Who is Required to Report?
Congress enacted the CTA in 2021, requiring most corporations, limited liability companies, limited liability partnerships and other entities to report Beneficial Ownership Information to the federal government. This reporting must be accomplished through the Financial Crimes Enforcement Network (“FinCEN”), a bureau within the U.S. Department of the Treasury, via a website established by FinCEN for this purpose. Failure to report accurately and on time can result in civil or criminal penalties—$500 for each day the violation continues or up to a $10,000 fine and/or imprisonment for up to 2 years.
When is the Deadline to Report?
Entities created before January 1, 2024, are required to report their Beneficial Owner Information no later than December 31, 2024. An entity created on or after January 1, 2024, must report no later than 90 days after the entity is formed. For entities created in 2025 or beyond, the report must be submitted 30 days after the entity is formed.
Who is a Beneficial Owner and What Information Must Be Reported?
The CTA requires entities to report all of their “beneficial owners”. This means all individuals who directly or indirectly (a) own at least 25% of the “ownership interest” in the entity or (b) have “substantial control” over the entity. An individual might be deemed a “beneficial owner” by virtue of having an ownership interest, by having substantial control, or both.
Additionally, entities created on or after January 1, 2024, are required to report individuals who directly filed or were primarily responsible for directing or controlling the filing of any documents that created or first registered the entity.
The following information must be reported about the reporting entity:
- Legal name
- All trade names and “doing business as” names
- Complete U.S. street address
- State in which the entity was formed
- Tribal or foreign jurisdiction of formation
- For a foreign reporting entity, the State or tribal jurisdiction of first registration
- Federal Taxpayer Identification Number or Foreign Tax Identification Number
In addition, the following information must be reported about each of the entity’s beneficial owners, persons with substantial control, and entity applicants:
- Name, Address and Date of Birth
- Identifying number and issuing jurisdiction from a non-expired driver’s license, U.S. passport, or other identification document issued by a state, local government, or Indian tribe, or a foreign passport (if none of the other documents exist).
A photograph or image of the document must also be provided.
Who is Exempt from Reporting?
Certain entities such as banks, credit unions, tax-exempt entities, public utilities and certain large companies, are several of the 23 types of entities exempt from CTA reporting requirements.
Where To Find Additional Information?
Additional information is available in the CTA Compliance Guide (see www.fincen.gov/boi). You may also contact us to help you determine if the CTA reporting requirements apply, beneficial ownership, reporting information and other filing requirements.
If we can be of assistance with your CTA filing or answering questions, please contact attorneys Heather Lobermann hlobermann@kddk.com or Kent (“KAB”) Brasseale II kbrasseale@kddk.com, or by phone (812) 423-3183. Please note that in order for us to assist with a CTA filing, our services must be separately and specifically engaged on KDDK’s CTA assistance engagement form.
