CORPORATE TRANSPARENCY ACT - FREQUENTLY ASKED QUESTIONS

1. What is the Corporate Transparency Act?

The CTA went into effect on January 1, 2024, and is intended to prevent financial crimes, such as money laundering. This is accomplished through “reporting companies” disclosing information about their “beneficial owners” to the federal government.

2. What is a reporting company?

In general, any entity created by filing a with the secretary of state or similar state administrative office (e.g., corporation, LLC, etc.) is a “reporting company” unless it qualifies for an exemption. Most of the exemptions are for businesses that are subject to federal reporting requirements, such as banks. However, the CTA does provide for a more generally available exemption, known as the “large operating company” exemption. To qualify as a “large operating company,” an entity generally must (1) have more than 20 full-time employees, (2) operate in the U.S., and (3) have more than $5M in revenue. If an entity does not qualify for an exemption, it must disclose information about itself and its “beneficial owners.”

3. Who are the beneficial owners of a reporting company?

The “beneficial owners” of a “reporting company” are those individuals who, directly or indirectly, either exercise substantial control over the entity (such as an officer) or own or control at least 25% of the ownership interests of the entity.

4. What information must a “reporting company” disclose to the federal government?

A reporting company must disclose the following information:

The entity’s name (including any trade name or “doing business as” name).
Address of the entity’s principal place of business (cannot be a P.O. box).
The jurisdiction in which it was formed.
The IRS tax identification number.

A reporting company must disclose the following information about each beneficial owner:

Full legal name
Date of birth
Current residential street address
An identifying number from a driver’s license, passport or other approved document.
An image of the document that contains the identifying number.

5. What are the filing deadlines?

The deadline to file the required disclosure varies depending on when the entity was or is formed.

For an entity formed before January 1, 2024, the filing is due by January 1, 2025.
For an entity formed from January 1, 2024, through December 31, 2024, the filing is due within 90 calendar days after formation.
For an entity formed January 1, 2025, and beyond, the filing is due within 30 calendar days after formation.

6. Are there penalties for noncompliance with the CTA?

Yes, failure to comply with the CTA can result in the individual(s) responsible for noncompliance being fined up to $10,000 and/or imprisoned for up to two years.

7. Are the attorneys at Dvorak Law Group able to assist me with CTA compliance?

Absolutely. Our attorneys are currently assisting clients with their CTA compliance and are prepared to assist you too.

8. Who should I contact if I have additional questions about the CTA?

If you have additional questions about the CTA, please contact one of our attorneys or, as an alternative, you can contact us at DLGCorporateReporting@ddlawgroup.com