Corporate Transparency Act (CTA) Resources from CT Corporation

The Corporate Transparency Act is a federal law that requires small businesses to file a beneficial ownership information (BOI) report with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report contains personal identifying information about a company’s beneficial owners as well as information about the company (and for reporting companies created or registered on or after January 1, 2024, information about the company applicants). The requirement went into effect on January 1, 2024.

The answer is found in the final reporting rule’s definition of reporting company, which is stated below. If the organization meets the definition it is required to file a report unless it qualifies for an exemption.

The final rule states that Beneficial Ownership Information reports have to be filed by domestic reporting companies and foreign reporting companies. A domestic reporting company is defined as an entity that is a corporation, LLC or other entity created by the filing of a document with a secretary of state or similar office under the laws of a state or Indian tribe. A foreign reporting company is an entity that is a corporation, LLC, or other entity created under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or similar office under the law of a state or Indian tribe.

There are 23 exemptions. Most are for companies that are already subject to substantial federal or state regulation under which their beneficial ownership may already be known. This includes, among others, entities that file reports with the SEC, governmental authorities, banks, credit unions, money services businesses, investment advisors, securities brokers and dealers, tax exempt entities, entities assisting tax exempt entities, insurance companies, state-licensed insurance producers, pooled investment vehicles, public utilities, inactive entities, subsidiaries of certain exempt entities, accounting firms, and large operating companies. For more information, read The 23 exemptions from the Corporate Transparency Act’s beneficial ownership information reporting requirement. 

On December 3, 2024, a federal district court in Texas issued an order granting a nationwide preliminary injunction that: (1) prevents enforcement of the CTA and of FinCEN’s rules implementing the CTA’s BOI reporting requirements, and (2) temporarily suspends all deadlines to comply with the CTA’s reporting requirements. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.

Reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.