learn about the Corporate Transparency Act

Frequently Asked Questions

The Corporate Transparency Act (CTA) broadly covers any corporation, limited liability company or “similar entity” that was created by filing a document with a Secretary of State, Tribal, or similar office.  Existing firms will have filed Federal Income Tax returns demonstrating less than $5,000,000 in gross receipts or sales in the aggregate.  Newly formed firms will have to automatically apply.  The company will have less than 21 employees.  There will be exceptions to this law. See FAQ below that lists the current proposed exceptions.

The Corporate Transparency Act ( CTA ) plans to exclude selected types of companies from filing. Here is the detailed list  click here

The penalties for non-compliance, such as failing to report or providing false information, include fines of up to $10,000 and a prison term of up to two (2) years for each offense!

The Corporate Transparency Act defines “company applicant” as an individual who files a document that creates a domestic reporting company or who first registers a foreign reporting company with a Secretary of State, Tribal office, or similar office in the United States. The proposed law also includes any individual who directs or controls the filing of such a document by another person.

FinCEN will retain this information and hold it in a confidential and secure database, only releasing information in specifically prescribed circumstances:

  • a request from certain federal or state agencies engaged in national security, intelligence, or law enforcement activity for use in furtherance of such activity,
  • in certain types of requests from a federal agency on behalf of foreign authorities,
  • a request by a financial institution “subject to consumer due diligence requirements,” with the consent of the reporting company, or
  • a request made by a “Federal functional regulator” or other regulatory agency to assess or otherwise ascertain compliance of financial institutions.

It means most small and mid-size entities throughout the United States must begin reporting to FinCen starting 2022.  FinCen estimates this new law will affect over 25 million entities.

Financial Crimes Enforcement Network, Bureau of the United States Department of the Treasury collected comments until Feb 7, 2022 to finalize the new law.  The CTA law is expected to be promulgated later in 2022.  Sign up for our Newsletter, and CTAfiler.com will inform you of the filing deadlines.

Companies subject to the CTA will be required to begin reporting to FinCEN in 2022.  Check back here at CTAfiler.com for the first day you can submit your report.

The proposed CorporateTransparency Act law will require:
* Companies formed or registered after the effective date of the regulations must submit the required report to FinCEN with 14 days of formation or registration,
* Companies formed or registered prior to the effective date of the regulations, must submit the required report to FinCEN no later than one year after the effective date of the regulations,
* After the initial report is filed with FinCEN, companies must update any changes in the reported information within 30 days on which the change occurred.

The Corporate Transparency Act defines “beneficial owner” as an individual who, directly or indirectly, through any contract, 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

Information Required for each “Beneficial Owner” and “Company Applicant”

  •  Full Legal Name
  • Date of Birth
  • Current Residential or Business Address
  • The unique identifying number from a Valid U.S. Passport, Personal Identification Card, or State Driver’s License
  • For non-US Citizens, if the individual does not have a U.S. passport, ID Card, or state driver’s license, the report must contain the identifying number from a valid foreign passport together with a legible and credible copy of the pages of that passport having a photo of the person, date of birth, and a unique identifying number for the person – all of which must be certified as valid by a person residing in the state or tribal territory where the entity is formed.

The Corporate Transparency Act is not clear on how Partnerships and Trusts will be considered.  Check back with CTAfiler.com for more information as it becomes available.

The purpose of the Transparency Act is to prevent potential wrongdoers from exploiting United States corporations and limited liability companies for criminal gain and to assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, and other misconduct involving United States corporations and limited liability companies, and for certain other purposes.

The Transparency Act information is not available to the public. As an important distinction from the ultimate beneficial owner registers and rules of other non-US jurisdictions, the current rules of the Transparency Act provide that the beneficial ownership information submitted to FinCEN would not be available to the general public. FinCEN has limited use of the information it receives.

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