The Corporate Transparency Act (CTA) aims to increase financial transparency and prevent illicit activities by requiring certain corporations, limited liability companies, and other entities to report information about their beneficial owners.
Beneficial owners are individuals who hold at least a 25% ownership stake in a company or exercise substantial control over its operations. Companies are required to disclose their beneficial owners’ name, address, date of birth, a unique identifying number from an acceptable identification document, and an image of a government issued photo identification.
Reporting Timelines for Established Companies
Companies created prior to January 1, 2024, must submit their initial beneficial ownership information reports to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. Meanwhile, companies created on or after January 1, 2024, are required to submit their initial reports within 30 days of the company’s creation or registration date.
Ongoing Reporting Duties
The reporting requirements under the CTA are not a one-time event. Rather, companies have an ongoing duty to update FinCEN when they become aware or have reason to know of changes in the company’s beneficial ownership or errors in previously submitted reports. Changes in beneficial ownership that may trigger additional reporting include a beneficial owner’s change of address, name, or death. Companies must notify FinCEN of such changes within 30 days of becoming aware of them. Managing these updates can be intricate and demanding, primarily because of the strict 30-day reporting window.
Consequences of Non-Compliance
Non-compliance with these reporting obligations carries civil and criminal penalties. Therefore, adherence to the prescribed timelines and a proactive approach to reporting changes in beneficial ownership are imperative to ensure compliance with the CTA.
Proposed Deadline Extension
FinCEN recently proposed extending the deadline to submit initial reports from 30 days to 90 days for companies established in 2024.
Speak to An Experienced Estate Planning & Tax Attorney Today
It’s important to stay ahead of CTA reporting requirements. If you have any questions or need assistance, speak with our trust, estate and tax law attorneys to ensure your compliance with the Corporate Transparency Act. Contact us today.
