Updated Reporting Requirements of the Corporate Transparency Act

As of January 1, 2024, the Corporate Transparency Act (the “CTA”) will require certain companies to begin reporting information about their beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury.

REPORTING TIMELINE: Currently, the following deadlines are in effect:

Entities formed prior to January 1, 2024, must file their initial report by January 1, 2025.
Entities formed on or after January 1, 2024, and before January 1, 2025, must file their initial report no later than 90 calendar days after formation.
Entities formed on or after January 1, 2025, must file their initial report no later than 30 calendar days after formation.

INFORMATION REQUIRED IN REPORT: Reporting companies are required to report the following information about the company and its beneficial owners:

Company: (1) entity name; (2) any trade name or “doing business as” name; (3) entity address; (4) the jurisdiction in which the entity was formed (domestic entity) or first registered (foreign entity); and (5) its Taxpayer Identification Number.
Beneficial Owners: (1) legal name; (2) birthdate; (3) address; (4) an identifying number from a driver’s license, passport, or other approved document; and (5) an image of the document that contains the identifying number.

Though a sample form is not yet available, FinCEN has indicated it will accept reports electronically.

IDENTIFYING BENEFICIAL OWNERS

Beneficial ownership refers to individuals who exercise substantial control, directly or indirectly, over the reporting company or control at least 25% of the ownership interests. An example of individuals who exercise “substantial control” include those individuals who are senior officers of the subject company.

APPLICATION TO A TRUST

FinCEN recently clarified in its Beneficial Ownership Information Reporting Frequently Asked Questions that a trust (such as a statutory trust or business trust) may be a reporting company if the trust was created by the filing of a document with the Secretary of State or similar office. Because a trust may be created in some states without such filing, whether a trust qualifies as a reporting company will differ state-to-state.

NEXT STEPS

Compliance with the Corporate Transparency Act reporting requirement, which is both complex and extensive, presents a new challenge for companies. The attorneys at Dvorak Law Group will continue to monitor guidance and legal authority from FinCEN and will be ready to properly advise you on the reporting requirement and whether it is applicable to your business. For other information on the CTA, please see our prior publication.