Edmunds Legal, PC
Client Alert: December 4, 2023
Prepare for Corporate Transparency Act Reporting Requirements
Beginning January 1, 2024, the Corporate Transparency Act will require many companies to report their beneficial owners to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Failure to comply with the new reporting requirements may result in hefty fines and/or potential imprisonment.
What Does This Mean for My Company?
If your company is a Reporting Company, you will be required to file an initial report with FinCEN outlining the Beneficial Owners of your company before January 1, 2025. You will also be required to update the report within 30 days of any changes related to the reported information. There is currently no fee associated with the filings.
A “Reporting Company” is any corporation, limited liability company, or any other entity type that was created by filing a document with the secretary of state (or a similar office) in any US state or any entity formed under the law of a foreign country that is registered to do business in any US state. There are twenty-three specific types of companies that are exempt from the definition of a Reporting Company, including banks, insurance companies, tax exempt entities, companies that are otherwise registered under various Securities and Exchange Act provisions, and large operating companies, which, among other requirements, must employ more than 20 employees full time and have more than $5,000,000 in annual gross receipts or sales.
Edmunds Legal has identified that most of its clients would fall within the definition of a Reporting Company and, therefore, would have to electronically file Beneficial Owner information with FinCEN.
A “Beneficial Owner” is any individual who:
- Exercises substantial control over a Reporting Company (such as a President, CEO, CFO, COO, or General Counsel), or
- Owns or controls at least 25% of the ownership interests of a Reporting Company.
What Must be Reported?
A company will have to report identifying information about itself and all Beneficial Owners.
For each Beneficial Owner, a Company must provide:
- The individual’s name;
- Date of birth;
- Residential address; and
- An identifying number from an acceptable identification document (such as a passport or U.S. driver’s license), and the name of the issuing state or jurisdiction of the identification document. NOTE: The Reporting Company must include an image of the identification document reported in the filing.
FinCEN maintains a frequently asks questions web page, which can be accessed here: Beneficial Ownership Information Reporting | FinCEN.gov
For assistance relating to the Corporate Transparency Act and its reporting requirements, please contact Catherine Edmunds at catherine@edmundslegal.com.
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This communication is provided as a service to our clients and friends and is for informational purposes only. It is not intended to create an attorney-client relationship or constitute an advertisement, a solicitation, or professional advice as to any particular situation.