Starting on January 1, 2024, under a new law called the Corporate Transparency Act (CTA), owners of certain business entities must file a report with the federal government including details regarding the ownership of their entity. The CTA was enacted to help combat money laundering, financing of terrorism, tax fraud, and other illegal acts. If you have an entity (corporation, limited liability company, family limited partnership, etc.) as part of your existing plan, this is important information you will need to know to ensure that you comply with the new law.
What is the Corporate Transparency Act?
The CTA is a law that requires business entities it identifies as reporting companies to disclose certain information about the company and its owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Under the CTA, a reporting company is defined as a corporation, limited liability company (LLC), or other similar entity (i) created by filing a document with the secretary of state or a similar office under the laws of a state or Indian tribe or (ii) formed under the laws of a foreign country and registered to do business in the United States.
The report must include the following information about the reporting company:
●company’s legal name and any trade names or doing business as (d/b/a) name
●street address of the principal place of business
●jurisdiction where the business was formed
●tax identification number
Additionally, the reporting company must provide the following information to FinCEN about its beneficial owners, defined as persons who hold significant equity (25 percent or more ownership interest) in the reporting company or who exercise substantial control over the reporting company.
●full legal name
●date of birth
●unique identification number from an acceptable identification document
131 U.S.C. § 5336(a)(11).
231 C.F.R. § 1010.380(b)(1)(i).
331 U.S.C. § 5336(b)(2)(A)
For reporting companies created on or after January 1, 2024, the same information must be provided about the company’s applicant, who is the person who files the creation documents for
the reporting entity.
Note: Although a trust is not considered to be a reporting company under the CTA if your trust has an interest in a reporting company, such as an LLC, certain information about your trust may also have to be disclosed under the CTA because it may be deemed to be the beneficial owner.