CTA
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CTA

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Understanding the Corporate Transparency Act of 2021

The Corporate Transparency Act of 2021 (the CTA), a federal law that took effect on January 1, 2022, mandates that all “reporting companies” must submit a report to the Financial Criminal Enforcement Network (FinCEN) of the U.S. Treasury, disclosing specific information. This information includes details about:

  • Beneficial owner(s) of the reporting company.
  • The individual (referred to as the “applicant“) responsible for establishing the company by submitting its formation documents (such as articles or a certificate of organization, articles of incorporation, or a certificate of partnership) to a state agency, such as a Secretary of State.

A beneficial owner is defined as an individual who, directly or indirectly, holds substantial control over the entity or owns or controls at least 25 percent of the entity’s ownership interests, through contracts, arrangements, understandings, relationships, or other means.

Corporate Transparency Act of 2021 Fines

As of January 1, 2024, the Corporate Transparency Act has begun enforcing reporting companies to file. Failure to file a FinCEN report by the due date can result in significant fines. Specifically, FinCEN can impose a $500/day fine for each day that the Corporate Transparency Act form remains overdue. The CTA also includes provisions for criminal penalties in cases of willful violations of the law.

It’s worth noting that nearly all entities formed in the U.S. fall under the category of reporting companies, regardless of their formation date. However, there are 23 exceptions comprising entities that are not considered reporting companies and are thus not obliged to submit a FinCEN report. Refer to the list of Corporate Transparency Act exemptions to determine if an entity qualifies as exempt.

If your company is not exempt from the CTA, it means:

  • It qualifies as a reporting company and must file a FinCEN report.
  • You have the option to enlist the services of CTA Filing Solution, LLC, to gather the necessary information regarding your company, its beneficial owner(s), and the person responsible for its formation. We will then prepare and file the report with FinCEN on your behalf.

Consider hiring us to streamline the process of collecting and submitting the required information for your reporting company’s initial or amended FinCEN report. Explore our services and review our fees for further details.

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If you would like a video simplifying our new law, see:

Official U.S Department of Treasury’s video on Beneficial Ownership Information Reporting Requirements

For more information and a quote for your company