Corporate Transparency Act
The Corporate Transparency Act (CTA) goes into effect on January 1, 2024. The CTA will impact corporations, limited liability companies, limited partnerships and other similar entities. These entities are known as reporting companies. The CTA is designed to capture more information about the ownership of specific entities operating in or accessing the U.S. market.
Beginning on January 1, 2024, the CTA will require reporting companies to disclose beneficial ownership information to the Financial Crime Enforcement Network (FinCEN), a bureau within the US Department of Treasury. A beneficial owner is defined as any individual who, directly or indirectly, exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests of a reporting company.
The beneficial owners must report to FinCEN their name, date of birth, address, and unique identifier number from a recognized issuing jurisdiction and a photo of that document. The unique identifier number can be provided by a scan of a Driver’s License, Passport, or other acceptable form of identification.
An individual may decide to file their information to FinCEN directly on or after January 1, 2024. Those individuals will be issued a “FinCEN identifier”. To obtain this identifier the individual must provide their full legal name, date of birth, address, unique identifying number, and issuing jurisdiction from an acceptable identification document and an image of the identification document. The reporting company may then provide this identifier on the Beneficial Ownership Information report instead of the required information listed in the previous paragraph.
Companies existing as of January 1, 2024, must register during the year 2024. Companies established in 2024 or thereafter must register within 30 days of formation. Failure to register will result in a $500 per day fine with no cap. Importantly, any change in the ownership interests or the control of the company will require new registration to show the new beneficial owner.
This post is just for general information. Your specific situation may differ and will require individualized legal advice. If we can help in any way, please contact us.