Corporate Transparency Act

Important Notice for Business Owners, Directors, Officers, Managers, Trustees and Other Responsible Parties

Important Notice: We are sending this Important Notice to inform you of a significant change in the federal law that will affect almost every business operating through a legal entity such as a corporation, limited liability company, or partnership.

The Corporate Transparency Act (CTA): The CTA is a federal law that establishes a national registry for reporting companies, through the filing of a Beneficial Ownership Information Report (BOIR).

Reporting Companies: Companies required to report are called reporting companies. There are two types of reporting companies:

  • Domestic reporting companies are corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
  • Foreign reporting companies are entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States.

Exempt Companies:  There are 23 types of entities that are exempt from the BOIR reporting requirements. These entities include publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies.  The rules are complex and it is important not to determine on your own whether a company is exempt or not.

Beneficial Owner Requirements:  Filings of BOIR reports are required for beneficial owners – meaning an individual who either directly or indirectly:  (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests. Because beneficial owners must be individuals (i.e., natural persons), trusts, corporations, or other legal entities are not considered to be beneficial owners.

Reporting Requirements: Filing of a BOIR is mandatory for beneficial owners of reporting companies and the reporting deadlines are as follows:

  • Entities existing as of December 31, 2023      BOIR due no later than January 1, 2025
  • Entities formed January 1 – December 31, 2024 BOIR due within 90 days of formation date
  • Entities formed on or after January 1, 2025 BOIR due within 30 days of formation date
  • Changes in Information. Once a BOIR is filed, you must submit a new BOIR filing within 30 days of each such change

Penalties: Failure to file a BOIR accurately and timely can result in civil penalties of up to $500 per day for each day the violation continues. Criminal violations are subject to a $10,000 fine, two years in prison, or both.

Assistance:

  • Couzens Lansky would be pleased to assist you with the complicated provisions of the CTA.
  • If you would like our assistance, please contact your Couzens Lansky attorney or email us at CTAinfo@couzens.com.
  • However, unless and until Couzens Lansky is retained in writing to perform services relating to CTA/BOIR matters on your behalf, Couzens Lansky does not assume any responsibility for preparing and filing BOIRs on your behalf.

Disclaimer: This communication is for information-only purposes and does not constitute legal or tax advice or establish an attorney-client relationship with you relating to any CTA/BOIR requirements.