Contact us

Insights & Resources

•

Complying with the Corporate Transparency Act: What You Need to Know

Filed under

    The Corporate Transparency Act – 31 U.S.C. § 5336 (CTA) is a federal law that requires businesses, both those created in the US and foreign companies operating here, to disclose important ownership and company details to the Financial Crimes Enforcement Network (FinCEN), a part of the US Department of the Treasury. The goal of the CTA is to make entity ownership and structures more transparent to combat money laundering, tax fraud and other illegal activities. 

    Who Needs to Comply?

    Any business entity formed or registered to do business in the US, such as an LLC, LLP or corporation, is considered a “Reporting Company” under the CTA. If your business falls into this category, you will need to file a Beneficial Ownership Information Report (BOI Report) with FinCEN. If you have multiple business entities, each business entity will need to file a separate BOI Report. 

    What Needs to Be Filed?

    The BOI Report must include details about: 

    The Reporting Company: The business entity formed or registered to do business in the US. Required information includes legal name of the entity, trade names or DBAs, address, jurisdiction of formation and EIN. 

    Beneficial Owners: Individuals who own 25% or more of the company or exercise significant control. Required information includes full legal name, date of birth, home address and unique ID (such as a US passport, a state, local or Indian tribal identification document, a state-issued driver’s license or a foreign government-issued passport). 

    Company Applicant: The individual who files the formation documents. Required information includes full legal name, date of birth, home address, unique ID (such as a US passport, a state, local or Indian tribal identification document, a state-issued driver’s license or a foreign government-issued passport) and a copy of the foregoing identification. Note that companies formed before December 31, 2023 do not need to provide this information. 

    Are There Exceptions?

    Certain types of entities are exempt from filing, including: 

    • Securities Exchange Act issuer 
    • Bank 
    • Depository institute holding company 
    • Broker/dealer in securities 
    • Other exchange act registered entity 
    • Venture capital fund advisor 
    • State-licensed insurance producer 
    • Public accounting firm 
    • Financial market utility 
    • Tax-exempt entity; entity assisting a tax-exempt entity 
    • Subsidiary of certain exempt entities 
    • Governmental authority 
    • Credit union 
    • Money services business registered with FinCEN 
    • Securities exchange or clearing agency 
    • Investment company or registered investment advisor  
    • Insurance company 
    • Commodity exchange act registered entity 
    • Public utility 
    • Pooled investment vehicle 
    • Large operating company  
    • Inactive entity 

    Filing Deadlines

    • Entities formed on or before December 31, 2023: Due by December 31, 2024. 
    • Entities formed between January 1, 2024 and December 31, 2024: Due within 90 days of formation. 
    • Entities formed on or after January 1, 2025: Due within 30 days of formation. 
    • Changes in information: Updated Report due within 30 days of any changes.

    Penalties for Noncompliance

    Failure to file a timely BOI Report or failure to provide complete and accurate information may result in both civil and criminal penalties. Civil penalties may include a fee or $500 per day per violation and criminal penalties may include a $10,000 fine and/or two years of imprisonment. 

    How Frazier & Deeter Can Help

    FD can assist with filing your BOI Report. While we do not provide legal advice for complex entity structures, we can help prepare and file reports for most businesses. Please reach out to our team for further assistance in ensuring compliance with the CTA. 

    Explore related insights

    Explore Insights & Resources