The Corporate Transparency Act (CTA), is a new federal law intended to provide law enforcement with specific ownership information for the purpose of detecting, preventing, and combating business entity misconduct.
To accomplish this, the CTA requires certain business entities to file information with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The experienced Business Law Group at Shaheen & Gordon has outlined the impact of CTA and is prepared to advise clients on their requirements.
Is My Business Affected by the Corporate Transparency Act?
The CTA-imposed filing requirements apply to “Reporting Companies”, which include corporations, LLCs, and other entities that are (1) created by filing with the secretary of state or similar office as required by state law, or (2) formed under the law of a foreign country and registered to do business in the U.S. In addition, foreign reporting companies identified as non-U.S. entities registered to do business in any state or tribal jurisdiction are also expected to file.
However, the CTA also outlines a number of exemptions from its filing requirements, including:
- Securities Reporting Issuer
- Governmental Authority
- Certain Financial Institutions
- Investment Companies and Advisors
- Insurance Companies and Producers
- Commodity Exchange Act Registered Entities
- Public Accounting Firms
- Public Utility Companies
- Tax Exempt Entities
- Large Operating Companies
- Inactive Entities
- Most Trusts Used for Estate Planning Purposes
If you have questions about whether your company is exempt or not, please contact our team.
What Information Is My Business Expected to Report?
The CTA requires a non-exempt Reporting Company to provide information about itself and information about its Beneficial Owners or Applicants.
A Reporting Company must provide the following information about itself:
- Name of the company
- Trade or d/b/a name
- Business address
- Location of formation or registration
- IRS taxpayer identification number (TIN)
A Reporting Company must also provide the following Beneficial Owner Information (BOI) for each Beneficial Owner and each Company Applicant:
- Full legal name
- Date of birth
- Current residential or business street address
- UIN from an acceptable identification document
- Image of the identification document
How do I File a CTA Report?
The filing process requires non-exempt Reporting Companies to submit BOI reports electronically through FinCEN’s Beneficial Ownership Secure System (BOSS), at https://boiefiling.fincen.gov/. While the CTA only requires an initial report and there is no annual reporting requirement, the act does impose an obligation to maintain accurate and up-to-date information with FinCEN. There is no fee for submitting the BOI report to FinCEN.
The reported information will not be publicly available and will be stored in a secure private database maintained by FinCEN. The BOI report is not collected by the Secretary of State and should only be submitted directly to FinCEN through the online filing system. The International Association of Commercial Administrators (IACA) advises reporting companies to refrain from reporting beneficial ownership information to any organization except for FinCEN and to beware of potential scam websites.
What are the Deadlines and Consequences of CTA
Depending on when your business was created, the CTA sets specific deadlines for filing a report.
Business entities created or registered prior to January 1, 2024 have until January 1, 2025 to comply with the new reporting requirements.
Business entities created or registered on or after January 1, 2024 must file a BOI report within 90 calendar days of notice of formation.
If your business was previously exempt, but no longer meets the criteria for exemption, then you must file an initial report within thirty days from the date your business no longer met exemption criteria.
If you fail to file a report, then you may face serious penalties. Any person who willfully provides false BOI or willfully fails to report complete or updated BOI to FinCEN shall be civilly fined $500 per day for each day the violation continues and may face criminal penalties including fines of up to $10,000 and/or imprisonment for up to two years.
Consider contacting one of Shaheen & Gordon’s knowledgeable business attorneys to help you stay compliant and avoid consequences. Our team has been proudly representing businesses across Northern New England for decades and are always ready to guide clients through the latest legal requirements. Contact our team today.
Maria T. Hyde is an attorney with Shaheen & Gordon’s Business Law and Litigation Groups. She represents individual and business clients in a range of civil and commercial matters in state and federal court.
