Corporate Transparency Act (CTA); 2024 Filing Requirement
In 2024, all Corporations and LLCs MUST file the required documents to comply or face severe penalties and fines.
New legislation which will take effect January 1, 2024 and will impose a new filing requirement upon the “Beneficial Owner(s)” of your Company. The requirement is the result of the implementation of the Corporate Transparency Act (CTA), a new filing requirement adopted by the Federal Government. The filing requirement will apply to most business organizations operating in the United States and will require that any entity, which is required by state or tribal law to file a document with the secretary of state or similar type of office so as to register to operate, to file with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The stated purpose of this legislation is to enhance U.S. National Security by attempting to prevent the misuse of corporations and LLC’s from money laundering, cyber-crime, perpetrating fraud on innocent individuals, tax evasion, human and drug trafficking, the proliferation of weapons of mass destruction and the financing of terrorism.
While the name and address of the owner of a new LLC or corporation are already required to be disclosed when an entity is filed in New York with the Secretary of State some states, like California and Delaware, do not require such ownership disclosure to be filed upon creation. Under the new CTA filing requirements additional information will also be required to be disclosed regarding the Beneficial Owner(s). The statute defines a Beneficial Owner as an individual who directly or indirectly either exercises substantial control over a reporting entity or owns or controls at least 25% of the interest of the reporting entity or company.
The information of the Beneficial Owner which is required to be disclosed is the following:
- Legal Name (of Beneficial Owner);
- Trade Name or D/B/A name;
- Residential Address (of Beneficial Owner);
- Date of Birth (of Beneficial Owner);
- ID # (Driver’s License, Passport or state ID card of Beneficial Owner);
- An image of the identification document.
There are 23 types of entities that are exempted from these filing regulations, many of which are already regulated by the federal and state government and already disclose ownership reports. Some of the entities that are exempt from the filing requirement are, “Large Companies” defined as companies with at least 20 full time employees, more than $5 million in gross receipts or sales annually and operating with a physical presence in the United States. Also exempt are certain tax-exempt entities, along with many financial institutions, broker dealers, certain investment companies, utilities and public accounting firms.
This disclosure is a one-time obligation and will NOT be required to be renewed annually, unless there is a new beneficial owner, the beneficial owner moves, is issued a new Passport or Driver’s License number, has his or her name changed or experiences any circumstance which changes the information originally filed with the FinCEN. Under the CTA the only entities that FinCEN will permit access to the filed information are, Federal, State, Local and Tribal officials who submit a request through a U.S. Federal government agency to obtain beneficial ownership Information for authorized activities related to national security, intelligence, and law enforcement. Financial institutions will also have access to beneficial ownership information in certain circumstances, provided consent has been given by the reporting company.
Corporate Transparency Act Exemptions
The following table summarizes the 23 exemptions:
| Exemption No. | Exemption Short Title |
|---|---|
| 1 | Securities reporting issuer |
| 2 | Governmental authority |
| 3 | Bank |
| 4 | Credit union |
| 5 | Depository institution holding company |
| 6 | Money services business |
| 7 | Broker or dealer in securities |
| 8 | Securities exchange or clearing agency |
| 9 | Other Exchange Act registered entity |
| 10 | Investment company or investment adviser |
| 11 | Venture capital fund adviser |
| 12 | Insurance company |
| 13 | State-licensed insurance producer |
| 14 | Commodity Exchange Act registered entity |
| 15 | Accounting firm |
| 16 | Public utility |
| 17 | Financial market utility |
| 18 | Pooled investment vehicle |
| 19 | Tax-exempt entity |
| 20 | Entity assisting a tax-exempt entity |
| 21 | Large operating company |
| 22 | Subsidiary of certain exempt entities |
| 23 | Inactive entity |
Let’s Talk
If you have additional questions or would like our firm to assist you in filing with FinCEN please feel free to call us at 315-797-7300 or contact our offices today and we will be happy to work with you to ensure that your filing is done in a timely and proper manner. Additionally, while taking steps to comply with the new filing requirement it may be a good opportunity to conduct an annual meeting for your LLC or corporation so as to update and or confirm your company’s officers, key personnel and management structure. I look forward to working with you in any capacity you may deem appropriate.
