Is Your Company Exempt from the Corporate Transparency Act?

The Corporate Transparency Act provides that all reporting companies must file a report with the Financial Criminal Enforcement Network (FinCEN) of the U.S. Treasury or be subject to a $500/day fine.  If you are an owner of a limited liability company (LLC), a professional limited liability company (PLLC) a corporation, a professional corporation, a limited partnership (LP), a limited liability partnership (LLP), a limited liability limited partnership (LLLP) you need to know if your company must file the FinCEN report or if it is exempt.

To determine if a company is exempt from the CTA’s FinCEN report requirement and its $500/day non-filing fine review the list of 30 exemptions contained in the CTA.  FYI: Almost all entities formed in the U.S. or outside the U.S. that do business in the U.S. are reporting companies under the CTA and must file a FinCEN report.  Companies that are not exempt from the CTA are called “reporting companies.”

FinCEN reports are due depending on when the entity was created.  Reporting companies formed before 2022 must file their FinCEN report not later than one year after the U.S. Treasury CTA regulations become final.  The CTA regulations have not become final so the filing clock has not started ticking for reporting companies formed before 2022.

Reporting companies created after 2021 must file their FinCEN report not later than 14 days after the entity was formed.  As of today the FinCEN has not created a way for newly formed entities to file their FinCEN report.

If you have a reporting company, it needs to hire us, FinCEN Filer, LLC, to assist in collecting the required information, preparing the company’s FinCEN report and filing the report with FinCEN.  That is what we do.  Hiring us will give you peace of mind that FinCEN won’t be fining your company $500/day for not filing its FinCEN report.

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Hire Us to File to Prepare & File a FinCEN Report

FinCEN Filer, LLC's purpose is to inform people about the Corporate Transparency Act and to prepare and file reporting companies' initial and amended CTA FinCEN reports. To hire us to prepare and file an initial or an amended FinCEN report go to our Services page.

2022-03-10T07:00:52-07:00By |

25+ Million Entities Must File a FinCEN Report Required by the Corporate Transparency Act

During a Senate Financial Services and General Government Appropriations Subcommittee U.S. Senator Cindy Hyde-Smith questioned Deputy Treasury Secretary Wally Adeyemo about the Biden administration’s actions that added new regulatory burdens on small businesses.  Senator Hyde-Smith also told Adeyemo that the Corporate Transparency Act imposes financial and compliance burdens on small businesses.  The CTA created a Beneficial Ownership Database that is intended to help fight financial crimes by bringing transparency with respect to who forms, owns, and controls American businesses and foreign entities that do business in the United States.  Hyde-Smith said:

“Treasury estimates the proposed rules to implement the Corporate Transparency Act will require more than 25 million existing small businesses to spend an aggregate of more than $4 billion to submit reports on their beneficial owners to the Financial Crimes Enforcement Network.  A lot of people really see this as an extra mandate and as extra work.  I hope that it does prove to be a very beneficial tool at addressing this issue, because it will be extremely burdensome for a lot of people.”

2022-06-20T14:53:03-07:00By |

Senators’ Letter to Treasury Secretary Criticizing FinCEN’s Failure to Finalize the Corporate Transparency Act

On May 10, 2022, U.S. Senators Marco Rubio (R-FL) and Elizabeth Warren (D-MA) sent a letter to U.S. Treasury Secretary Janet Yellen and Acting Director of the Financial Crimes Enforcement Network (FinCEN) Himamauli Das regarding the delayed implementation of Rubio’s Corporate Transparency Act (CTA), which was signed into law in 2020 (P.L. 116-283).  Senators Chuck Grassley (R-IA), Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), Bob Menendez (D-NJ), and Bill Cassidy (R-LA) also signed the letter.

“The Treasury Department has yet to finalize the implementation of the CTA—or even set a timetable for its completion,” the senators wrote. “In various hearings last month, both of you could only commit to proposing the second CTA rule by the end of ‘this year.’ These delays run contrary to the clear instructions of Congress, undermine American efforts to respond to Russia’s war against Ukraine, and hinder broader efforts to protect the U.S. financial system against the threat of illicit finance.” 

The text of the letter is below.

Dear Secretary Yellen and Director Das:

We write to urge the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to swiftly implement the Corporate Transparency Act (CTA).

Passed by Congress last year, the CTA is landmark legislation to upgrade our country’s anti-money laundering laws. “For years, experts routinely ranked anonymous shell companies— where the true, ‘beneficial’ owners are unknown—as the biggest weakness in our anti-money laundering safeguards.” The CTA directly tackled this problem by requiring FinCEN to create a national registry of beneficial owners of companies within the United States, bolstering our nation’s efforts to combat kleptocracy, transnational crime, terrorism, and other illicit activity.

Vladimir Putin’s invasion of Ukraine has only amplified the importance of the CTA. The federal government cannot properly implement sanctions against Putin and his oligarchs if it does not know the full extent of their holdings. But recent reporting suggests that the Treasury Department presently lacks this information, underscoring the urgent need for beneficial ownership disclosure as required by the CTA to protect America’s financial stability and national security.

Nevertheless, the Treasury Department has yet to finalize the implementation of the CTA —or even set a timetable for its completion. We appreciate that FinCEN is working with limited resources, and Congress is working to remedy that through the appropriations process. Still, over four months after the statutory deadline for implementation, FinCEN has only proposed one of its three CTA rules. In various hearings last month, both of you could only commit to proposing the second CTA rule by the end of “this year.” These delays run contrary to the clear instructions of Congress, undermine American efforts to respond to Russia’s war against Ukraine, and hinder broader efforts to protect the U.S. financial system against the threat of illicit finance.

For these reasons, we respectfully request that FinCEN immediately accelerate its implementation of the Corporate Transparency Act and provide an update and a detailed timeline on your efforts to do so no later than May 23, 2022. Thank you for your attention to this important matter.

2022-05-16T07:39:11-07:00By |

Senators’ Letter to FinCEN Asking It to Implement the Corporate Transparency Act

On May 5, 2022, U.S. Senators Marco Rubio (R-FL), Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), and Chuck Grassley (R-IA) sent a bipartisan comment to the Financial Crimes Enforcement Network (FinCEN) encouraging the efficient, effective implementation of a beneficial ownership reporting system, as required by the Corporate Transparency Act (CTA).

The comment is below.

To Whom It May Concern,

We write in response to the Financial Crimes Enforcement Network’s (FinCEN) advance notice of proposed rulemaking regarding to the implementation of the Corporate Transparency Act (CTA), enacted into law as part of the National Defense Authorization Act for Fiscal Year 2021.  As a bipartisan group of senators, we encourage FinCEN to implement a strong, efficient, and effective system that respects congressional intent.

The passage of the CTA marked the culmination of a years-long effort in Congress to combat money laundering, international corruption, and kleptocracy by requiring certain companies to disclose their beneficial owners to law enforcement, national security officials, and financial institutions with customer due diligence obligations.  During that time, Congress held numerous hearings across a host of committees, sought input from key stakeholders, worked with officials from both the Obama and Trump administrations, and considered multiple pieces of related legislation and models from other nations.

In crafting the CTA, Congress negotiated many complex policy issues, including what information would be reported, how that information would be collected, and who would have access to it.  We and other drafters of this law sought to strike the proper balance between collecting accurate and useful information and not overburdening businesses with compliance obligations.  In the end, the CTA also received strong support from a vast and diverse stakeholder coalition, including law enforcement, national security experts, the business community, the real estate community, the financial sector, and non-governmental organizations.

In light of the broad support for the CTA, we urge FinCEN to take all steps to ensure that the beneficial collection system reflects Congress’s intent that the system produce high-quality data and that authorized users have timely access to that data.  To achieve this, FinCEN should be mindful not to leave loopholes that could dilute the quality of the information collected or allow bad actors to evade reporting.  Additionally, the information is only useful if authorized users are able to efficiently access the data.  As such, FinCEN should ensure that authorized users, including law enforcement and national security officials, and financial institutions with customer consent, have early, timely, and full access to beneficial ownership information.  The access procedures should build on existing protocols and those provided for in the legislation and should avoid creating redundant hurdles that would unnecessarily delay access.

In short, the CTA is the product of a sensitive and painstaking legislative process, and its passage represents perhaps the most important anti-money laundering reform of the past decade.  Despite the legislative success, this achievement can only be realized if the system works in practice.  As such, we encourage FinCEN to implement a straightforward, efficient, and effective system and to do so promptly.

2022-05-16T07:43:05-07:00By |

FinCEN’s Acting Director Testifies before Congress

FinCEN Director Him Das testified on April 28, 2022, before the House Committee on Financial Services.  Very little of his written statement dealt with the Corporate Transparency Act.  He closed by saying:

“In closing, timely and effective implementation of the AML Act, which includes the CTA, is a top priority. . . . limited resources have presented significant challenges to meeting the implementation requirements of our expanded mandate under the AML Act, including the CTA’s beneficial ownership requirements. As you are aware, we are missing deadlines, and we will likely continue to do so. FinCEN’s budget situation has required prioritization across the board, but we are working hard to meet our obligations.

See his prepared statement.

2022-05-16T08:07:21-07:00By |

Why You Should Get a FinCEN Identifier

Question: Should I get a FinCEN Identifier?

Answer:  It depends.  If you do not own 25% or more of a reporting company and do not control a reporting company you do not need a FinCEN identifier.  However, if you own 25% or more of more than one reporting company or have substantial control of more than one reporting company I recommend that you get a FinCEN identifier because it will make it very simple for you to give your personal information to reporting companies.

Instead of giving a reporting company your legal name, birth date, business or residence address and number from your driver’s license, state id card or passport you merely give the reporting company your FinCEN identifier.

Hire Us to Get You a FinCEN Identifier

Go to our FinCEN identifier page to hire us to get your FinCEN identifier.

2022-02-27T16:30:11-07:00By |

What is a FinCEN Identifier?

Question:  What is a FinCEN identifier?

Answer: A FinCEN identifier is a code issued by FinCEN to a person or an entity that can be used to identify the person or entity in a FinCEN report.  When a FinCEN identifier is used in a FinCEN report that required information about the beneficial owner or applicant does not have to be included in the report.

2022-02-27T16:32:26-07:00By |

What if a Trust Owns a Reporting Company?

Question:  If a Trust owns 25% or more of a reporting company is the trustee a beneficial owner of the reporting company?

Answer:  Yes.  A beneficial owner of a reporting company is any individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise exercises substantial control over the entity or owns or controls not less than 25 percent of the ownership interests of the reporting company.

The trustee of a trust is the legal owner of the trust’s assets.  Normally the trustee’s ownership of a reporting company will satisfy the criteria set forth above, which makes the trustee a beneficial owner of the reporting company and the trustee’s information must be disclosed on the reporting company’s FinCEN report.

All trustees of a trust that satisfies the criteria set forth above are beneficial owners of the reporting company.  If Homer and Marge Simpson are trustees of their family estate planning trust that owns 25% or more of a reporting company then both of them must disclose their information on the reporting company’s FinCEN report.

2022-02-27T16:14:05-07:00By |

FinCEN’s Corporate Ownership Rules Stir Debate From Banking, Small Business Groups

A February 9, 2022, article in the Wall St. Journal discusses the Corporate Transparency Act (CTA).  Here are some statements from the article:

“FinCEN in December released what it said were the first of three sets of proposed rules governing how the database will work. . . . FinCEN on Tuesday said it received more than 230 comments in response to its proposed rules. . . . stakeholders, however, including organizations representing financial institutions and small businesses, expressed concerns over the potential challenges in complying with various aspects of the proposal, including the deadlines for submitting or correcting information submitted to FinCEN. . . . Several groups . . . said that the complexity of FinCEN’s definition of a beneficial owner could force even the smallest companies to engage attorneys and consultants to navigate the requirements [emphasis added], a measure that the NFIB argued small businesses couldn’t afford.”

2022-02-11T08:01:51-07:00By |

FinCEN Statement Regarding Beneficial Ownership Information Reporting and Next Steps

On February 8, 2022, FinCEN published a press release about beneficial owners.  The press release says:

The Financial Crimes Enforcement Network (FinCEN) notes that the comment period to the December 8, 2021 notice of proposed rulemaking (NPRM) requiring the reporting of beneficial ownership information (BOI) (the “Reporting NPRM”) has closed.  FinCEN received over 230 comments.

The Reporting NPRM is the first in a series of rulemakings that FinCEN will issue to implement the Corporate Transparency Act (CTA).  The next step in the CTA rulemaking series will be FinCEN’s publication of proposed rules on BOI access and disclosure requirements (the “Access NPRM”), which FinCEN anticipates publishing later this year.

Some commenters requested the opportunity to submit, supplement, or amend, their comments on the Reporting NPRM after having the opportunity to review the Access NPRM.  FinCEN is considering these requests.  FinCEN anticipates that the dates of any reopened comment period would be published in the Federal Register in conjunction with the Access NPRM.

FinCEN appreciates the many comments on the Reporting NPRM that have already been submitted.  FinCEN strongly encourages all interested parties, including those that may be affected by the proposed beneficial ownership information reporting rule, to review the Access NPRM once issued and to submit written comments.

2022-02-10T08:10:58-07:00By |
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