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New Year, New Reporting Requirements Under the Corporate Transparency Act

Blake Herbison and William Milne

By: Attorneys Blake Herbison and William Milne

Starting Jan. 1, 2024, the U.S. Dept. of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) will begin to require reports on beneficial ownership under the Corporate Transparency Act (“CTA”) and related regulations.

In essence, the CTA requires “Reporting Companies” to report personal identifying information, or FinCEN Identifiers, about its individual “Beneficial Owners” and “Company Applicants” to FinCEN, and creates an ongoing obligation to file updated reports as changes in beneficial ownership occur.

The previously mentioned terms are defined broadly, but also include many specific exceptions. It is clear, however, that most small businesses will be considered “Reporting Companies” required to make these newly required reports to FinCEN.

“Reporting Companies” will have to ask their individual “Beneficial Owners” and “Company Applicants” for personal information, including: full names, dates of birth, current street addresses, a unique government issued ID number (such as U.S. passport number or a state driver’s license number), and an image of the unique ID document. Alternatively, an individual can apply for a FinCEN Identifier from FinCEN to provide to the “Reporting Company.”

There are several different deadlines for initial reports depending on when a “Reporting Company” is created/registered:

  • Reporting Companies created/registered before Jan. 1, 2024 have until Jan. 1, 2025, a full year, to file their initial report.
  • Reporting Companies created/registered during 2024 will have 90 days from their creation/registration to file initial reports.
  • Reporting Companies created/registered after Jan. 1, 2025 will have 30 days from their creation/registration to file initial reports.

There are civil and criminal penalties for failing to comply with reporting requirements, or for unauthorized use or disclosure of the information collected for reporting.

Our Business & Corporate Lawyers are prepared to assist with any questions you may have about this new reporting obligation and the Corporate Transparency Act.