Understanding the Corporate Transparency Act: Does it apply to your Business?
By: Andrew Slom | February 15, 2024 | Real Estate and Corporate
As of January 1, 2024, the Corporate Transparency Act (CTA) comes into full effect, ushering in a new era of transparency for small businesses and entities primarily engaged in real estate holdings. Enacted by Congress in 2021, the CTA aims to combat money laundering and the clandestine acquisition of assets by requiring the disclosure of beneficial ownership information (BOI) to the US Department of Treasury's Financial Crimes Enforcement Network (FinCEN).
Who does the CTA apply to?
All entities categorized as "Reporting Companies," which encompass domestic or foreign entities registered to conduct business within the United States. While certain exemptions exist—such as publicly traded companies and most financial institutions—entities meeting specific criteria can also be exempt from the CTA's filing requirements. This includes businesses having over twenty full-time employees, reporting more than $5 million in annual revenue, and operating from a physical office within the United States. A full list of exempt businesses can be found here.
What does filing entail?
Reporting Companies must submit a BOI Report to FinCEN, detailing the information of all beneficial owners. This includes their full legal name, current address, date of birth, and identification number (e.g., passport or driver's license number). A Beneficial Owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests.
Important deadlines:
Reporting Companies established or registered before January 1, 2024 have until January 1, 2025 to file their initial BOI report. Those established or registered after January 1, 2024 have ninety (90) days from their creation or registration date to file. Entities created or registered after January 1, 2025 will have thirty (30) days to file their initial BOI report.
If you suspect that your business may be impacted by the CTA, don't hesitate to reach out to us for expert guidance and assistance navigating this regulatory landscape. Stay informed, stay compliant, and protect the integrity of your business operations.
