Corporate Transparency Act (CTA)

helpful links:

What Is the CTA?

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 US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Under the CTA, a reporting company is a corporation, limited liability company (LLC), or other similar entity created by filing a document with the secretary of state or a similar office under the laws of a state or Indian tribe or formed under the laws of a foreign country and registered to do business in the United States. The following information about the reporting company must be included in the report:

  • company’s legal name, and any trade name or “doing business as” name

  • street address of the principal place of business

  • jurisdiction in which the business was formed

  • tax identification number

Additionally, the reporting company must provide the following information about its beneficial owners, which are 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

  • current address

  • unique identification number from an “acceptable identification document”

Reporting companies created on or after January 1, 2024, must provide the same information about the company’s applicant (i.e., the person who files the creation documents for the reporting entity).

Does the CTA impact you?

Many business regulations apply only to large businesses, but the CTA specifically targets smaller business entities. If you own a small business, you may be subject to this act unless the business falls under one of the stated exemptions, which are primarily applicable to industries that are already heavily regulated. Your business may also be exempt from the reporting requirements if it employs more than 20 full-time employees, filed a return showing more than $5 million in gross receipts or sales, and has a physical office located within the United States.

We routinely create entities that might qualify as reporting companies as part of our clients’ estate plans. If you have an entity as part of your estate plan, for example, to hold out-of-state real estate or valuable tangible personal property, receive valuation discounts, or protect assets, you may be required to comply with the CTA.

What do you have to do to comply with the CTA?

To comply with the act, you should gather the required information for all reporting companies that you are a beneficial owner of, as well as the information for any additional beneficial owners. Entities created before January 1, 2024, must submit the required reports by January 1, 2025. A reporting company created on or after January 1, 2024 and before January 1, 2025, must file its initial report within 90 days of the entity’s creation. Entities created on or after January 1, 2025, will have 30 days to submit the reports with FinCEN.

developments to watch:

National Small Bus. United v. Yellen, No. 5:22-cv-1448-LCB (N.D. Ala. Mar. 1, 2024) - UPDATED: Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.) | FinCEN.gov