The Corporate Transparency Act (“CTA”) was a bipartisan act passed to address money laundering and concealment of unlawful funds within U.S. companies. The CTA imposes a significant burden on small businesses required to collect beneficial information, and harsh penalties for noncompliance.

What Is the Corporate Transparency Act, and Who Must File

The CTA requires corporations, limited liability companies, other similar entities formed under state laws, as well as entities formed under the laws of a foreign country that have been registered to do business in the United States, to report information on all beneficial owners (“Beneficial Ownership Information”) and Company Applicants to the Financial Crimes Enforcement Network (“FinCEN”).

A beneficial owner is an individual who exercises substantial control over a reporting company or controls at least 25% of the ownership interest of the company. A company applicant is the individual who directly files the document that creates or registers the company; and if more than one person is involved in the filing, the individual who is primarily responsible for directing or controlling the filing. A reporting company can only have up to two company applicants.

There are limited exceptions to those required to file a report.

One of the most prevalent exceptions is an entity that meets all three of the following requirements

1. More than 20 employees employed on a full-time basis in the U.S.,
2. Five million in annual gross receipts, and
3. A physical office within the U.S.

Other exceptions consist of:

• Issuers of securities and entities that are registered with the SEC;
• Banks and credit unions;
• Investment companies and advisors;
• Insurance companies or providers;
• Public accounting firms;
• U.S. public utility companies;
• Any pooled investment vehicle;
• Any political organization, trust, or other tax-exempt corporation;
• Inactive entities that meet certain requirements

Under this act a company that is required to file a report will be required to report identifying information on; the company; any individual who exercises substantial control over a reporting company or controls at least 25% of the ownership interest of the company (“Beneficial Owner”); and for entities formed on or after January 1, 2024, Company Applicants.

Information Required to be Reported 

Identifying Information Required at the Entity Level:

• The full legal name of the company
• Any trade name or doing business as name
• A complete current address
• The State, Tribal, or Foreign jurisdiction of formation
• For a foreign reporting company, the State or Tribal jurisdiction where such company first registers; and
• The Taxpayer Identification Number of the reporting company

 

Identifying Information Required at the Beneficial Ownership, and Company Applicant Level:

• Full legal name
• Date of birth
• Residential address
• Identifying number from an identification document like a passport or drivers license
• An image of the identification document the identifying number is retrieved from

Deadlines for Compliance and Penalties for Non-Compliance

Deadlines for compliance are as follows:

Date of Creation	Timeline to File Initial Report with FinCEN
Created before January 1, 2024	Until January 1, 2025
Created during 2024	90 days
Created on or after January 1, 2025	30 days

 

Change in Information	Timeline to File Updated Report
Exempt entity that no longer qualifies as exempt	30 days
Entity with change in beneficial ownership information	30 days

 

A person who willfully violates the reporting requirements may be subject to civil penalties of up to $500 (adjusted for inflation) for each day that the violation continues. Violators may also be subject to criminal penalties of up to two years imprisonment and a fine of up to $10,000.

How RS&F Can Help: Our Filing Solution 

We understand that navigating these new reporting requirements can be challenging, especially for smaller entities that may not have dedicated compliance teams. That’s why we utilize a dedicated website, CTA Filing Center, to assist with CTA compliance. This platform not only handles the submission of beneficial ownership reports to FinCEN but also provides ongoing support to help entities stay in compliance with the CTA and avoid hefty penalties.

What You Should Do Next

If your business is required to file under the CTA, or if you’re unsure of your obligations, we encourage you to reach out to our team. Early action is critical to avoid fines and to establish good compliance practices moving forward. We are committed to helping you navigate these requirements with confidence and ease.

For more information or to access our CTA compliance tools, please contact us directly at info@rsandf.com. We’re here to help you stay compliant and protect your business from costly penalties.