Preparing for the Corporate Transparency Act

Beginning January 1, 2024, the Corporate Transparency Act (the “Act”) will impose substantial reporting and disclosure requirements on new and existing business entities throughout the country. Any business that is subject to the Act will be required to disclose certain personal information about its beneficial owners. The U.S. Treasury Department, through its Financial Crimes Enforcement Network (“FinCEN”), is tasked with collecting and maintaining the information. Any person that fails to comply with the Act may be subject to a $500 per day civil penalty, a fine of $10,000 and imprisonment for up to two years.

In short, the Act imposes this disclosure obligation on “Reporting Companies” which are defined as any entity that is created or registered by “filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.” These Reporting Companies, unless otherwise exempt, must report certain information about all of their “Beneficial Owners,” including their full legal name, date of birth, residential address, and a copy of their government issued ID (i.e., driver’s license or passport). Beneficial Owners under the Act are “any individual who, directly or indirectly, either exercises substantial control over such reporting company or controls at least 25 percent of the ownership interests of such reporting company.”

Reporting Companies also must report personal identifying information to FinCEN about those individuals that file documents with the secretary of state to create or register the Reporting Company. Reporting Companies must file this information with FinCEN within thirty (30) days of creation of a domestic Reporting Company or registration of a foreign Reporting Company, increased to ninety (90) days for entities created or registered in 2024. If any reported information changes with respect to Beneficial Owner information previously disclosed to FinCEN, Reporting Companies must report this change to FinCEN within thirty (30) days of the change, even if that entity is created during 2024. For those non-exempt business entities in existence before January 1, 2024, they must file Beneficial Owner information with FinCEN before January 1, 2025.

FinCEN has indicated there will be an online portal known as the “Beneficial Owner Secure System” (“BOSS”) for Reporting Companies to comply with these requirements. As of December 21, 2023, the portal is still in active development. We anticipate that in the very near future FinCEN will announce when the portal will open so Reporting Companies can begin to upload data in compliance with the Act.

We send this notice to you so that you are aware of the Act. This notice is not intended to be specific legal advice. We urge you to consider reading the Act and acquaint yourself with the ongoing obligations under the Act as those obligations continue to be refined by the Federal Government. Information about the act can be found at https://fincen.gov/boi. If you wish to speak with an attorney related to these obligations, please contact our office to schedule an appointment with one of our attorneys.