Corporate Transparency Act (CTA) Resources from CT Corporation

The Corporate Transparency Act is a federal law that will require tens of millions of small businesses to file a beneficial ownership information (BOI) report with the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This report will contain personal identifying information about a company’s beneficial owners. The requirement is effective January 1, 2024. Harsh civil and criminal penalties can be imposed on companies that fail to comply.

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.

The final rule defines a beneficial owner as follows: “For purposes of this section, the term “beneficial owner,” with respect to a reporting company, means any individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of such reporting company.” Read Who is a beneficial owner under the Corporate Transparency Act for additional details.

Any domestic reporting company created on or after January 1, 2024, must file a report within 30 calendar days of either receiving actual notice that its creation has become effective or the Secretary of State or similar office first providing public notice it’s been created, such as through a publicly accessible registry, whichever occurs first.

Any entity that becomes a foreign reporting company on or after January 1, 2024, must file a report within 30 calendar days of either receiving actual notice that it has been registered to do business or the Secretary of State or similar office first providing public notice it’s been registered, such as through a publicly accessible registry, whichever occurs first.

A domestic reporting company created before January 1, 2024, and an entity that became a foreign reporting company before January 1, 2024, must file a report not later than January 1, 2025.