Corporate Transparency Act: What You Need To Know

The Corporate Transparency Act (CTA) went into effect on January 1, 2024, creating a national beneficial owner database to be used in combating money laundering, by requiring companies to report information about their beneficial ownership to the Financial Crimes Enforcement Network (FinCEN), a part of the U.S. Treasury Department.

Who Must File Reports with FinCEN?

Reporting Companies are required to file with FinCEN.  A “Reporting Company” is any nonexempt corporation, limited liability company, or similar entity that is (i) created by a filing with a federal, state, or tribal governmental entity or (ii) authorized to do business in the U.S.

Most existing and startup entities will be Reporting Companies.  However, the CTA and its regulations list 23 categories of entities that are exempt from the definition of a Reporting Company. Generally, the exempt entities are in categories that are already subject to state or federal supervision.

When Must the Reports Be Filed?

Companies existing prior to January 1, 2024 have until January 1, 2025 to file information with FinCEN.

Companies formed between January 1, 2024 and December 31, 2024 have 90 days from the filing of formation documents to file the information with FinCEN.   Companies formed on or after January 1, 2025 have (30 days from the formation to file the information with FinCEN.

Also, when previously reported information changes, the Reporting Company is required to report the change to FinCEN within 30 days of the event occurring.

What Information is to be Included in the Reports?

In summary, all Reporting Companies must report information on:

• the Reporting Company,
• all “Beneficial Owners” of the Reporting Company, and
• for entities formed after January 1, 2024, the “Company Applicant(s)” who filed the document creating the Domestic Reporting Company or the document registering the Foreign Reporting Company.

A “Beneficial Owner” is anyone who directly or indirectly:

• exercises substantial control over the Reporting Company, or
• owns 25% or more of the equity interest in the Reporting Company.

All reporting is accomplished through the FinCEN BOSS portal.

What Happens if a Company Does Not Report?

Failure to timely report can result in civil and criminal penalties so please be sure to report before the deadline.

How Can Woods Rogers Help?

If you have questions about the CTA reporting requirements or exemptions, contact a member of Woods Rogers' Commercial Real Estate or Corporate and Business Transactions groups.

Entities can self-report, but if you would like our firm’s assistance completing and filing the Beneficial Ownership Information reports, reach out to Barbara Kahn, Director of Business Services, at barbara.kahn@wrvblaw.com or 757-446-8544.