Effective January 1, 2024, the Corporate Transparency Act (CTA) will require many entities to report information about their “beneficial owners” to the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The entities that must submit certain information to FinCEN are called “reporting companies.”

A “reporting company” is a corporation, limited liability company, or other similar entity that cannot be created without filing formation documents with the Secretary of State. The federal regulations accompanying the CTA provide little guidance as to what constitutes an “other similar entity.” The CTA also defines 23 types of entities exempt from the “reporting company” definition, including entities that: employ more than 20 full-time employees in the US, had more than $5M in gross receipts the previous year, and have an operating presence at a physical office in the US.

Reporting companies in existence before January 1, 2024, must file their initial report with FinCEN on or before December 31, 2024. Entities formed in 2024 have 90 days from their date of formation to file; and entities formed in or after 2025 will have 30 days from their date of formation to file. Failure to file may result in fines or penalties, including criminal prosecution.

Each initial report filed with FinCEN must provide information about the entity and its beneficial owners. Entities formed in or after 2024 will also be required to submit information about the “applicant(s)” who formed the entity. The initial report must include each beneficial owner’s and, where applicable, each applicant’s, full legal name, date of birth, residential address, an identifying number from an acceptable identification document, such as a US Passport or state driver’s license, and the name of the issuing state or jurisdiction of that document. Additionally, the reporting company will have to submit an image of the identification document used to obtain the identifying number. The initial report must also include the entity’s full legal name, any trade name or “doing business as” name, current address, and jurisdiction of formation. Foreign entities and individuals are subject to additional requirements. If information in the initial report changes, an update must be filed, generally, within 30 days.

Importantly, beneficial ownership information will not be publicly available. Rather, it will be available only to certain US agencies and law enforcement agencies. In rare circumstances, this information may be available to certain financial institutions and “foreign requesters,” but usually only with the filer’s consent.

For more information about beneficial ownership information, visit the Financial Crimes Enforcement Network website at fincen.gov/boi.

About Wescott Law
Navigating these new reporting requirements can be a daunting task. Wescott Law’s experienced attorneys are available and ready to assist you with evaluating what reporting requirements you may have under the CTA. Contact us today at info@wescottlawnh.com or (603) 524-2166.