The Corporate Transparency Act (CTA) was designed to combat money laundering and other financial crimes by requiring a broad range of entities to disclose information about their owners and persons who exercise control to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury.

The CTA is simple in concept, but technical in its application, here are some keys to navigating these new reporting requirements:

• Determining if an entity is a Reporting Company that must report to FinCEN (or whether that entity falls into one of many enumerated exceptions to the reporting requirement)
• Identifying who the Beneficial Owners and Company Applicants are (whose information must be reported)
• When reports are due to FinCEN

The CTA will require existing and newly formed entities to report personal information for owners and those persons who exercise substantial control.  Failure to report will result in penalties of $500 per day, a fine of up to $10,00, and up to two years in prison.

If you are unwilling or unable to file the report yourself, DHC is ready to assist.  

Who Needs To Report?

Reporting Companies include both domestic and foreign entities. Domestic Reporting Companies include corporations, LLPs, or any other similar entities that are created by the filing of a document with a secretary of state or any similar office under the law of a state. Foreign Reporting Companies include privately formed entities and any other similar entities formed under the law of a foreign country that are registered to do business in the United States.

Exempt companies can be summarized as follows:

• Sole proprietorships, general partnerships, and Trusts
• Publicly traded companies
• Governmental Entities
• Regulated financial institutions such as banks and insurance companies
• Public Utility Companies
• Tax-exempt entities and political organizations registered with the IRS
• Non-operational U.S. companies, defined as being in existence for over 1 year, not engaged in active business, not holding any assets, has not sent or received funds greater than $1,000 in a calendar year, and has not had a change in ownership.
• Large companies, defined as those that employ 20 or more people on a full-time basis, have more than $5,000,000 in gross receipts, and has an operating presence at a physical office within the United States

When to Report:

• Companies formed before 1/1/24 must submit a report no later than December 31, 2024.
• Companies formed in 2024 must submit a report within 90 days of formation.
• Companies formed on or after 1/1/25 must submit a report within 30 days of formation.
• Any updates or corrections must be submitted within 30 days.

How to Report:

The report must be filed online at https://boiefiling.fincen.gov/fileboir

What to Report:

Any person who exercises substantial control of a non-exempt entity, and any individual who directly or indirectly owns 25% or more of the entity needs to provide their information.  For any company formed on or after January 1, 2024, the person who created the company by filing with the Secretary of State, and the person on whose behest the company was filed, will need to provide their information.

The information that needs to be reported is as follows:

1. Reporting Company
   1. Legal Name
   2. Tax ID Number and Identification Type (for most companies, EIN)
   3. Jurisdiction of Formation
   4. Address
2. Individuals:
   1. Name
   2. Date of Birth
   3. Address
   4. Information about and copy of ID of Applicant (Driver’s License or Passport)