The new reporting requirements under the Corporate Transparency Act for all corporations, limited liability companies and other businesses, will begin in 2024. These are details you need to know:
What is the Corporate Transparency Act?
The Corporate Transparency Act was enacted in the beginning of 2021 and was part of the Anti-Money Laundering Act of 2020. This legislation authorized the Financial Crimes Enforcement Network (FinCEN) to collect ownership information on reporting companies and disclose it to authorized government authorities and financial institutions to assist the federal government in pursuing financial crimes.
What is the Reporting Requirement?
Beginning January 1, 2024, reporting companies will be required to file a beneficial ownership information report with FinCEN. Reporting companies that were in existence as of January 1, 2024, must file their initial report by January 1, 2025. New companies that are formed on or after January 1, 2024 must complete and file their initial report within 30 days after they were created or registered.
After filing their initial report, a reporting company will only need to file another beneficial ownership report when they need to report changes to their initial report. The company must report any changes within 30 days of when they become aware of a change or has reason to know of an inaccuracy of information in their earlier report.
What Companies Are Affected by the Corporate Transparency Act?
A reporting company is defined as a corporation, limited liability company (LLC), a limited partnership, limited liability partnership, any entity created by the filing of a document with the secretary of state or similar office under the law of a state or Indian tribe, or formed under the laws of a foreign country and registered to do business in the United States.
This Act does not apply to sole proprietorships or general partnerships.
What Type of Information Must Be Reported?
When filing a Beneficial Ownership Report with FinCEN, the reporting company must report the following information:
- Company identifying information such as:
- Legal name of the entity
- Jurisdiction in which it was first formed and registered in
- Tax identification number
- Identifying information on beneficial owners (the individuals who ultimately own or control the company) such as:
- Birth date
- ID number from their passport or driver’s license
- Image of document with ID
The information contained in these reports to FinCEN can only be disclosed by FinCEN to a government agency, law enforcement or financial institution for compliance with anti-money laundering or other diligence obligations.
See the following for more information: