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Corporate Transparency Act (CTA)

The Corporate Transparency Act (CTA) was enacted as part of the National Defense Act for Fiscal Year 2021. The CTA mandates that millions of entities report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This resource is meant to provide a preliminary overview of the provisions in the CTA. 

Who is required to report under the CTA’s BOI reporting requirements?

  1. All domestic and foreign entities that have files formation or registration documents with the U.S. state (or Indian tribe), unless they meet one of the 23 exceptions (See question # 8 of FinCEN FAQs for a full list of exemptions), including:
    • EXEMPT: Large operating entities that meet the following criteria:
      • Employ more than 20 people in the U.S.
      • Had gross revenue / sales over $5 million on the prior year’s tax return
      • Has a physical office in the U.S.
    • EXEPT: Publicly traded companies that have registered under Section 102 of SOX

When must companies file?

  • New entities created / registered after 12/31/2023 – must file within 30 days
  • Existing entities created / registered before 1/1/2024 – must file by 1/1/2025
  • Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports – must file within 30 days.

What information do companies need to report?

  • Each company must report the information below. Click or tap here for an example of the form.
    • Full legal name of the reporting company and any DBA names
    • Business addresses
    • State of formation or registration
    • IRS TIN
  • In addition, each reporting company must report the following details on it beneficial owners and, for the newly created entities, its company applicants(s):
    • Name
    • Birthdate
    • Address
    • Unique Identification number and issuing jurisdiction from an acceptable identification document (and image of said document)

What are the taxpayer penalties for noncompliance with the statute?

  • Civil penalties are up to $500 per day that a violation continues. 
  •  Criminal penalties include a $10,000 fine and/or up to 2 years of imprisonment. 

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