Making Clear the Corporate Transparency Act: Essential Information for Practitioners
Written By Geena Michaelides, Law Clerk, Mayer Law, LLC
What is the CTA?
The Corporate Transparency Act, which went into effect on January 1, 2024, is a federal regulation that will require businesses to submit beneficial ownership information (BOI) to the US Department of Treasury’s Financial Crimes Enforcement Network (FinCen). The Act aims to gather additional information about the ownership of specific business entities operating or engaging with the US market with the goal of combating illicit activities.
Who does it affect?
The CTA requires limited liability companies, corporations, and any other entities created by the filings of a document with a Secretary of State (or similar office) to file a BOI report with FinCEN.
Existing companies created or registered to do business by filing a document with a secretary of state that was created or registered before January 1, 2024, must file an initial BOI report by January 1, 2025.
New companies created or registered to do business by filing a document with a secretary of state that was created or registered on or after January 1, 2024 and before January 1, 2025, must file an initial BOI report within 90 calendar days after receiving notice of the company’s creation or registration.
Any LLC, corporation, or other entity created or registered on or after January 1, 2025 will have 30 days after receiving notice of the company’s registration to file a BOI report.
What type of information must be disclosed?
Businesses and companies impacted by the CTA must submit information about the company and its beneficial owners. A beneficial owner is any individual who exercises a substantial amount of control over the company. A beneficial owner could also be someone who owns or has control over at least 25% of the company’s ownership interests. There is no limit on the number of beneficial owners.
The BOI report requires the disclosure of information relating to who owns or controls the business, including the individual’s legal name, birthdate, home address, and identifying number from a driver’s license, state ID, or passport, and an image of the document that the number is from.
Collected information is only available to certain government agencies, and will be used for law enforcement, national security, and intelligence purposes. Additionally, the collected information will be available to financial institutions and regulatory agencies for reporting purposes.
And the good news is, the BOI report only needs to be submitted to FinCEN once. The law only requires an initial filing, and updates or corrections when needed!
For more information, other legal consideration, or assistance with the Corporate Transparency Act, or if you should need assistance with anything else related to your Practice, we welcome you to contact us at (443) 595-M-Law or by email at contact_us@danielmayerlaw.com.
DISCLAIMER:
This article is legal information and is not provided as a source for legal advice. It is made available by Mayer Law, LLC for educational purposes only and to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this blog, you understand that no attorney-client relationship is established between you and Mayer Law, LLC. This blog should not be used as a substitute for competent legal advice; you should consult with an attorney before relying on this information.