Reporting companies can include both domestic and foreign companies. Domestic reporting companies include corporations, LLCs, or any other similar entities that have filed a document with a secretary of state or any similar office pursuant to state law. Foreign reporting companies include privately formed entities under the law of a foreign country that are registered to do business in the United States (i.e. have filed a document with a secretary of state or similar office registering the company to do business in any state).

A common exemption (i.e. the large operating company exemption) exists for an entity that (i) employs at least 21 employees on a full-time basis in the United States; (ii) filed a Federal income tax returns in the United States with more than $5 million in gross receipts or sales in the previous year; and (iii) operates and has a presence at a physical office within the United States.

FinCEN has created 23 specific categories of exemptions from the requirement to file under the Corporate Transparency Act, however, most companies will be required to file. Contact our team to discuss whether your entity or entities may qualify for an exemption.

A reporting company must report both information about its beneficial owners and information about its entities, described below:

Beneficial Owner Information

A beneficial owner is an individual who, directly or indirectly, through contract, arrangement, understanding, relationship, or other facts and circumstances (i) exercises substantial control over the entity; or (ii) owns or controls at least 25% of the equity interests of the entity.

For each beneficial owner, the reporting company must provide the individual’s: (i) full legal name; (ii) birthdate; (iii) home address; (iv) an identifying number from a driver’s license, passport, or other approved documents; and (v) an copy of the driver’s license or passport that contains the identifying number. A beneficial owner can also apply for a FinCEN identifier number which can be used on subsequent reports instead of repeating the above information.

Entity Information

Reporting companies subject to the CTA are required to provide the following information regarding the entity: (i) full legal name; (ii) trade names or d/b/a names; (iii) address of the entity; (iv) the jurisdiction of formation or registration; and (5) the federal taxpayer identification number.

Company Applicant Information

For each company applicant, the applicant must provide the individual’s: (i) full legal name; (ii) birthdate; (iii) address (which may be a business address if the applicant works in corporate formation); (iv) an identifying number from a driver’s license, passport, or other approved documents; and (v) an copy of the driver’s license or passport that contains the identifying number. Similar to beneficial owners, a company applicant may provide a FinCEN identifier instead.

Any person who provides false information or fails to comply with reporting requirements is liable for civil penalties of up to $500 for per day that the violation continue. Violators are also subject to criminal penalties of imprisonment of up to two years and fines of up to $10,000.

Companies created after January 1, 2024, must file their initial reports 90 days after receiving notice of their registration with a secretary of state or similar office. Existing reporting companies that were formed before January 1, 2024, must file their initial reports no later than January 1, 2025.

While there is no periodic filing requirement, reporting companies have 30 days to amend their report to include updated information (i.e. updated beneficial owners, control persons, change in address, etc). Additionally, reporting companies are obligated to correct inaccurate information previously filed within 30 days of discovering the error.

Contact us to determine whether your business may be eligible for an exemption. If not, and your business is a reporting company, we will help you determine what must be done to comply with the CTA. Beneficial can provide end-to-end service with respect to CTA filing requirements and can help with a plan to get all your business entities submitted in time. Given the additional guidance regularly being released by FinCEN, we will also help you remain informed as to any updates.