by Kevin Fitzgibbons, Fitzgibbons Law
The Corporate Transparency Act (CTA) is part of a federal effort to combat illegal money laundering and other financial crimes.
The CTA went into effect Jan. 1, 2024, requiring most U.S. companies to file first-time paperwork with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Failure to comply can carry stiff fines and jail time.
Here are general answers to FAQs.
Does my business have to file a report? Entities required to report include LLCs, most corporations, most partnerships and certain types of trusts.
Who is exempt? Exempt companies include sole proprietorships, certain types of partnerships (consult with your attorney), inactive entities that meet specific requirements, and large companies in specified regulated industries.
What has to be reported? The required information is relatively simple, such as the legal name, trade names or DBAs, physical address, jurisdiction of formation (e.g., Arizona), and Employer Identification Number (EIN).
The reporting company must provide specific information about (a) the “company applicant” (the individual who filed the application to form the legal entity) and (b) each of the reporting company’s “beneficial owners.” For each individual, the report must include their name, date of birth, home or business address, and a unique identifying number from an acceptable identification document, along with an image of the document.
A “beneficial owner” is someone who exercises “substantial control” over the entity; owns 25% or more of the equity interests of a corporation or LLC; or receives substantial economic benefits from the entity’s assets.
When to file? If your entity existed before Jan. 1, 2024, you have until Dec. 31, 2024, to file your initial report. If your entity is created during 2024, you must report within 90 calendar days from its inception date. An entity created after 2024 must report within 30 calendar days.
How do we file? You must use the FinCEN online portal at boiefiling.fincen.gov/fileboir.
What if we don’t file? Failure to file on time can be costly. “Willful” violations can carry civil penalties ($500 a day) and, in some cases, criminal liability (up to $10,000 in fines and two years in prison).
How often do we have to file? Every time something in your report changes, you have to file another report. Any change to a previously filed report must be reported to FinCEN within 30 days of the change, and any error must be corrected within 14 days of filing.
For more information, visit www.fitzgibbonslaw.com/cta.
