CTA
What is the Corporate Transparency Act? New federal reporting effective January 1, 2024. Reports must include personal identifying information of beneficial owners, and will need to be filed with the Financial Crimes Enforcement Network, also known as FinCEN, which is an agency within the U.S. Department of Treasury.
Corporate Transparency Act
Entities formed on or before December 31, 2023 are required to file with FinCEN by January 1, 2025. Existing U.S. entities need to determine whether or not an exemption is met. If there is no exemption met, they will need to identify who the reportable beneficial owners are as of the initial filing date.
Entities formed after January 1, 2024 are required to file with FinCEN within 90 days of formation made in calendar year 2024, will be 30 days starting in calendar year 2025. Newly-formed U.S. entities need to identify the applicant(s) to include in the report (the entity applicant is the person(s) responsible for directing or filing the entity’s formation documents.
Regardless of formation date, beneficial owners and reporting entity information must be filed with FinCEN and kept up to date after any changes to the information included in the filing. Updates must be reported within 30 days of any change. The specific details of reporting requirements and exemptions are continuing to evolve. Honigman is closely monitoring changes to these requirements.
Some entities that meet technical definitions are exempt from reporting under the CTA. This includes some larger entities, entities that are registered with the SEC, tax-exempt entities, and venture capital fund advisors. Honigman can assist you in determining whether an exemption applies to your operations.
Honigman’s Corporate Transparency Act regulatory specialists can help you understand your compliance obligations and determine whether or not your entity needs to file. Please reach out to Angela Gamalski, Brandy Bruyere or your Honigman Attorney with any questions.
What are the consequences for failing to file? Every entity is responsible for its own reporting obligations. Individuals who own or run entities can be held liable for an entity’s failure to make a required report to FinCEN. Fines for failing to make a filing when required start at $591 per day, and there are additional civil and criminal penalties possible for reporting inaccurate or incomplete ownership information.
Angela Gamalski Brandy Bruyere