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Corporate Transparency Act Alert

HORNTHAL, RILEY, ELLIS & MALAND, L.L.P.

Attorneys at Law

301 East Main Street

Elizabeth City, North Carolina 27909

Telephone (252) 335-0871      Telefax (252) 335-4223

 

CORPORATE ALERT

By: Andrew W. Howle (updated 1/6/2024)

 

CORPORATE TRANSPARANCY ACT AND NEW REPORTING REQUIREMENTS

            There are new business reporting requirements that most small businesses will have to comply with as a result of the newly enacted Corporate Transparency Act (the “CTA”).  The CTA was created in an effort to curtail money laundering and fraud through entities such as corporations and LLCs (referred to as “reporting companies”). The CTA will require that most non-public entities report information regarding their respective “beneficial owners” and “company applicants” to the Financial Crimes Enforcement Network (“FinCEN”).  “Beneficial owners” are those who own or control not less than 25% of the ownership in the reporting company, or who otherwise exercise substantial control over the reporting company.  “Company applicants” are those who assist in filing documents to form the reporting company, and may include paralegals and attorneys who file or supervise the filing of documents with the Secretary of State in order to form the reporting company.

There are possible civil and criminal penalties for willfully failing to report complete or updated beneficial owner information, or for willfully providing false or fraudulent information.

The CTA reporting requirements differ depending on whether a reporting company was created before January 1, 2024 (referred to as “Established Reporting Companies”) or created on or after January 1, 2024 (referred to as “New Reporting Companies”).   An Established Reporting (a reporting company created before January 1, 2024) has until January 1, 2025 to file its initial beneficial owner information with FinCEN.  A New Reporting Company that is created on or after January 1, 2024 but before January 1, 2025 will have 90 days after it is created to file its initial beneficial owner information with FinCEN.   A New Reporting Company that is created on or after January 1, 2025 will have 30 days to file its beneficial owner information with FinCEN.

If there are any changes to or inaccuracies in reported information, the reporting company will have 30 days to report the changes or correct the inaccuracies.

For additional information, please refer to the following sources:

Corporate Transparency Act Requirements, available at: https://www.hrem.com/2024/01/corporate-transparency-act-requirements/.

 

The following sources on FinCEN’s own website:

  1. Small Entity Compliance Guide, Beneficial Owner Information, Reporting Requirements: https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf
  2. Beneficial Owner Information Reporting, Frequently Asked Questions: https://www.fincen.gov/boi-faqs#M_3.
  3. Filing reports: https://www.fincen.gov/boi.