Entity Owners Need to Understand the Corporate Transparency Act of 2021
The Corporate Transparency Act of 2021 (the CTA) is a federal law that became effective on January 1, 2022. The CTA requires all “reporting companies” to file a report with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury that discloses information about:
- the beneficial owner or owners of the reporting company
- the person (aka “applicant”) who created the company by filing its formation documents (articles or certificate of organization, articles of incorporation, or certificate of partnership) with a state agency such as a Secretary of State. Applicant information is only required if the entity was formed after 2023.
A beneficial owner is an individual who, directly or indirectly, through any contract (such as a trust agreement), arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity; or (ii) owns or controls not less than 25 percent of the ownership interests of the entity.
Corporate Transparency Act Fines
Corporate Transparency Act reporting is very important because if a reporting company fails to file a FinCEN report on or before the report’s due date FinCEN can fine the company $500/day. Yes. The fine is $500 for each day the Corporate Transparency Act form is delinquent. The CTA also has criminal penalties for willful violations of the law.
Almost all entities formed in the U.S. are reporting companies, regardless of when the company was formed. There are thirty types of entities that are not reporting companies and that do not have to file a FinCEN report. See the list of the Corporate Transparency Act exemptions to determine if an entity is not a reporting company and not required to file a FinCEN report.
If your company is not exempt from the CTA then:
- It is a reporting company and it must file a FinCEN report, and
- It should hire us, FinCEN Filer, LLC, to collect the required information about the company, its beneficial owner or owners and the person who formed the company and then prepare and file the report with FinCEN.
Hire Us to Prepare and File A Reporting Company’s Initial or Amended FinCEN Report
Our business assists reporting companies in collecting information from their beneficial owners and applicants and then preparing and filing the reporting companies’ initial or amended FinCEN report. See our services and fees.