The CTA: More Work / Less Privacy

Hey there business owners! Did you hear about the new law that just passed called the Corporate Transparency Act (CTA)?

I know, I know, hearing about new legislation is probably not the most exciting thing, but trust me, this is something you need to know about! You may be required to send a copy of your driver’s license or passport to a federal agency. And there are hefty fines for non-compliance.

Basically, the CTA was created to help prevent money laundering and promote transparency by requiring companies to disclose more information about their owners. This new law goes into effect on January 1, 2024, and it applies to all companies formed before and after that date.

So, who does this new law apply to? Well, it applies to both domestic and foreign companies, but there are a few exemptions for certain types of entities like public companies, banks, investment companies, and subsidiaries of exempt entities. If you're not sure if your company falls under the exemptions, it's best to consult with a legal expert.

Now, let's get to the nitty-gritty of what you need to report. You'll need to provide your company's full legal name, all trade and d/b/a names, and the street address of your principal place of business. Domestic companies will also need to report their jurisdiction of formation and TIN, while foreign companies will need to report their jurisdiction of formation, jurisdiction of registration in the U.S., and either their TIN or foreign tax identification number.

The most important part of the CTA is reporting information about beneficial owners, which are individuals who either directly or indirectly own or control at least 25% of the company's ownership interests or exercise substantial control over the company. You'll need to report the name, date of birth, and residential address of each beneficial owner, along with an identifying number and image from one of four acceptable identification documents.

It's important to note that reporting companies must fulfill certain action items to ensure compliance with the CTA. These include identifying and verifying the identity of beneficial owners, submitting reports to FinCEN, and maintaining accurate and up-to-date records.

I know this all sounds like a lot of work, but it's essential to comply with the CTA to avoid any legal issues down the road. If you have any questions or concerns about how the CTA applies to your company, don't hesitate to seek guidance from a legal professional.