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Corporate Transparency Act

(What are the requirements and what entities are affected?)

Aug. 14, 2023

The majority of business owners, including the real estate investors and small family businesses, will be affected by the Corporate Transparency Act (CTA). CTA, effective on January 1, 2024, requires reporting entities to disclose the information about their beneficial owners.

What are the reporting requirements under the Corporate Transparency Act?

All reporting companies will have to file a report with FinCEN (the Financial Crimes Enforcement Network, a bureau of the United States Department of Treasury). This report shall include the information about the beneficial owners of the company.
A beneficial owner is someone who, directly or indirectly, either (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of the ownership interest of a reporting company.

Business owners falling under the Act's purview must report the following information about their beneficial owners to FinCEN:

  1. Full legal name

  2. Date of birth

  3. Current residential or business address

  4. Unique identifying number from an acceptable identification document (e.g., passport or driver's license)

Who is affected by the Corporate Transparency Act?

The Corporate Transparency Act applies to a broad range of entities, including corporations, LLCs, partnerships, and other similar legal structures.Any corporation, limited liability company, or other similar entity created or registered to do business by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe, are considered to be reporting companies.Exemptions exist for certain entities such as publicly traded companies, financial institutions, and non-profit organizations.

Next week’s newsletter will discuss the deadlines for compliance, how to prepare for compliance, and the consequences of non- compliance.

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