Let’s unpack the ins and outs of the Corporate Transparency Act. Although it might not be surprising to firms that concentrate on corporate representation, it will be an “eye-opener” to those attorneys who try and help friends and family without having corporate experience because the law is complex.
On January 1, 2024, almost ALL business entities formed and/or operating in the United States became responsible for preparing and filing beneficial ownership and/or substantial control reports with the United States Treasury. Congress passed the “Corporate Transparency Act” (CTA) in fiscal year 2021 with an implementation of January 1, 2024.
What You Should Know
With minimal exceptions, all business entities (Corporations, Limited Liability Companies) and “similar entities” (although undefined, it is being interpreted as likely including Limited Liability Partnership, Limited Liability Limited Partnerships, etc.) will be required to advise the US Treasure of the following information:
- The legal name of the business entity
- Address of the principal place of business
- The formation jurisdiction
- The tax identification number assigned thereto
Additionally, as for each beneficial owner (defined as any member owning at least 25% interest in the business entity OR substantially controls the business entity), a report containing the following information on each such owner: (a) Full legal name; (b) date of birth; and (c) unique identification number (which is classified as the number from a valid US Passport, US driver’s license as well as a legible photograph/image of the individual owner).
Effective January 1, 2024, any new entity subject to these reporting requirements shall submit the required reports within 30 days of the entity’s formation. For any previously existing entity (formed before January 1, 2024), all such applicable reports are due on or before January 1, 2025.
As with all pieces of legislation, there are exceptions to every rule. We suggest consulting the business entity’s legal counsel (in-house or outside counsel) for further explanation and preparation. Of course, Breza & Associates welcome the opportunity to discuss your situation here.