In discussing the CTA, the following definitions are important:
- Reporting Company
A corporation, partnership, LLC, or any other similar entity organized under state law, or a foreign entity formed under the laws of a foreign country and registered to do business in the United States.
- Beneficial Owner
Any individual who (1) directly or indirectly exercises substantial control over a reporting company, or (2) directly or indirectly owns or controls 25 percent or more of the ownership interests of a reporting company.
- Company Applicant
An individual who either directly files the document that creates or first registers the reporting company, and/or who is primarily responsible for directing or controlling the filing of the relevant document. There can be up to two company applicants per reporting company. If only one person was involved in filing the relevant document, then only that person should be reported as a company applicant.
The CTA does not apply to all entities.
Exemptions apply for 23 categories of entities, such as companies that are already subject to reporting regulations, like investment companies, insurance companies, tax-exempt entities, federal and state credit unions, and certain banks.
“Large operating companies” and wholly-owned subsidiaries of exempt entities are also exempt, but this exemption does not extend to subsidiaries of pooled investment vehicles (i.e., private equity funds).
View Exemptions
When to File
The due date for the initial report depends on when the company was created.
- Companies created before January 1, 2024: no later than January 1, 2025.
- Companies created on or after January 1, 2024: the initial report is due within 90 calendar days of the date the company is created.
How to File
Companies required to report beneficial ownership information to FinCEN will do so electronically through a secure filing system.
Reporting Requirements
The Corporate Transparency Act requires reporting companies to file specific information about their company, their beneficial owner(s) and their company applicant(s). For more on these requirements, read our latest client update.
Both individuals and reporting companies are subject to civil and criminal penalties for failure to comply with their obligations under the Corporate Transparency Act, which may include a fine of up to $500 for each day the violation continues, imprisonment for up to two years, or both.
FinCEN will store and maintain all reported beneficial ownership information (BOI) in the Beneficial Ownership Secure System (BOSS), which is still under development.
The Corporate Transparency Act imposes strict confidentiality, security, and access restrictions on the data FinCEN collects. The information reported to FinCEN will not be accessible to the public and is not subject to the Freedom of Information Act requests.
FinCEN is required to maintain the information until five years after the reporting company terminates or is otherwise dissolved.