The Corporate Transparency Act (the “Act”) aims to prevent, among other things, money laundering and tax fraud. The Act requires certain entities to submit beneficial ownership information to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Who Will It Affect?
Reporting companies are required to report beneficial ownership information. A reporting company is defined as any entity created by a filing of a document with a secretary of state, including corporations, limited liability companies, and limited partnerships. This includes domestic and foreign entities registered to do business in the United States.
There are 23 exempt categories, including public companies, nonprofit entities, financial institutions, accounting firms, subsidiaries of exempt entities, and “large operating companies.” Please refer to the FinCEN website for an exhaustive list of exempt categories.
What Do Companies Need to Do Now?
Reporting companies must submit information on the entity itself, information on beneficial owners and, for companies formed after January 1, 2024, information on company applicants.
Information on the reporting company itself includes full legal name, including any trade names or d/b/as, current address and EIN.
Information on beneficial owners includes name, address and an image of the owner’s current passport or driver’s license. Beneficial owners include those who exercise substantial control (e.g., a senior officer or board director) and those who own or control 25% or more of the reporting company.
Information on company applicants includes similar information required for beneficial owners. Company applicants are those who file the document to create the entity and/or those who file the beneficial ownership application. Only reporting companies formed after January 1, 2024, must report company applicants.
What Are the Key Deadlines?
For existing reporting companies, beneficial ownership information must be submitted to FinCEN by January 1, 2025. For reporting companies formed after January 1, 2024, beneficial ownership information must be submitted to FinCEN within ninety days of creation. This ninety-day grace period currently applies only to reporting companies formed in 2024 and may change in 2025.
Where Should You Report?
Reporting companies will submit beneficial ownership information electronically through a secure filing system available via FinCEN’s website. The report to file beneficial ownership information is not yet available.