As of January 1, 2024, the Corporate Transparency Act (CTA) is in effect. Enacted as part of the 2021 National Defense Authorization Act, the CTA is the United States Government's latest step to improve business transparency and stymie companies, entities, or people engaging in tax fraud, money laundering, and other types of business fraud.

Origin of the CTA

According to the CTA, more than 2 million corporations and limited liability companies are formed in the U.S. each year. Most states don't require any information regarding the beneficial owners of these corporations and companies. This leads to bad actors facilitating illicit activity through these entities.

Who Should Be Aware?

If your company is a corporation or LLC created or formed under U.S. laws or the laws of a foreign country, you'll be required to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

Identifying Ownership

There are 23 different entities that will be exempt from reporting beneficial ownership reporting. Companies that are not exempt from the CTA will need to identify ownership to be submitted to FinCEN. According to FinCEN, an owner is considered to be anyone who controls at least 25% of the reporting company's ownership interests, or "exercises substantial control over the reporting company." Visit fincen.gov/boi for more information on exempt entities and ownership clarity.

Reporting Disclosures

Company applicants are defined as the individual who directly files the document to create or register the reporting company and, if applicable, the individual who is primarily responsible for directing or controlling such filing.

Reporting companies must disclose the following information:
Full legal name of the company
Any trade names or DBA names
The address of the company
State or jurisdiction of formation
Federal Taxpayer ID number

Each beneficial owner and company applicants must disclose:
Full legal name
Date of birth
Current residential street address
Unique ID number from acceptable ID (includes passport and driver’s license)
Photocopy of the above-mentioned ID

MRPR has a copy of the online reporting form. If you would like to see it prior to performing the online reporting, please reach out to a MRPR team member and we can share it with you.

Penalties for Non-Compliance

The law requires many Companies doing business in the United States to report information about who ultimately owns or controls them. Failure to comply with the reporting requirements or the willful attempt to provide false or fraudulent information can result in civil and criminal penalties.

Next Steps

Since this reporting may fall under the unlawful practice of law, MRPR will not be preparing beneficial ownership information report. Attorneys are getting familiar with this topic and should be able to provide more guidance and assistance in this area.

Also, visit the fincen.gov website to learn more about this new reporting requirement and review the following informative sections:

• BOI Homepage
• Small Business Resources
• Reference Materials
• BOI Newsroom
• BOI Frequently Asked Questions
• BOI E-Filing System