Corporate Transparency Act

On January 1, 2021, the United States Congress enacted the Corporate Transparency Act (the “CTA” or “Act”) to take effect on January 1, 2024. This new law requires the disclosure of identifying information concerning beneficial owners of certain US corporations and limited liability companies to the Financial Crimes Enforcement Network (“FinCEN”). The purpose of the CTA is to combat terrorism, money laundering, and tax fraud by requiring disclosure of “beneficial owners” (explained in detail below). However, the Act’s scope and impact are far-reaching, and require disclosures for most small and medium sized business across the country, as well as nearly all companies designed to hold and maintain assets.

A “beneficial owner” is defined as someone who either (1) owns 25% or more of a company; or (2) has “substantial control” over the affairs of the business. 31 C.F.R. 1010.280(b)(1)(ii). “Substantial control” is further defined as anyone who:

• Is a senior officer of the company; or
• Has authority over the appointment or removal of senior offices or a majority of the Board of Directors, or similar governing body; or
• Can substantially influence important decisions; or
• Has direct or indirect substantial control of company affairs through the Board of Directors, majority voting power, or rights relating to financial instruments; or
• Has any other form of substantial control over the affairs of the business.

“Beneficial owners” must provide the following information and supporting documentation to FinCEN¹:

• Full Legal Name
• Date of Birth
• Current Physical Street Address (P.O. Boxes are unacceptable)
• Unique Identification Number (such as a Driver’s License, Passport, State ID, etc.)²
  • A copy of the identification document must also be provided.

The deadline to file the initial report is January 1, 2025.

After the initial report has been submitted, the Company will further be responsible for submitting updated reports within 30 days after (1) there is a change in information for any current beneficial owners, such as a name or address change, or (2) there is a change in beneficial owners.

The penalties for the willful failure to comply with the Act ranges from a civil penalty of $500 per day of noncompliance to a criminal penalty of a $10,000 fine or 2 years of jail. It is thus imperative the company submits full and accurate reports to FinCEN.

Once prepared, the initial and subsequent reports may be filed at the following website:  https://boiefiling.fincen.gov/.

To comply with the new statute, your entity must file certain information with FinCEN. Each qualifying entity must file the following information³:

• Full legal name of the company
• Any trade name or “doing business as” names
• Complete current U.S. address
  • The “principal place of business”
• State jurisdiction of formation
• Taxpayer Identification Number (TIN), Employee Identification Number (EIN), or a “FinCEN Identifier”
  • The company may apply for a specific FinCEN number if preferred; note that the company must provide their EIN to obtain one.
• A list of “beneficial owners” and their identifying information (discussed in more detail below).

As such, we encourage you to reach out to us to help ensure your Company is in compliance with the new requirements. We can help answer questions or provide further information needed to help you file complete and accurate reports.

Please note that the entity, as well as any senior officers, are solely and ultimately responsible for the complete and accurate filing of these FinCEN reports, including the initial filing and any subsequent filings. While Webber & Thies, P.C. is happy to assist with these filings, we cannot and do not guarantee the company’s compliance with the Corporate Transparency Act.

If you have any questions, or would like to set up a time to discuss, please do not hesitate to reach out to Webber & Thies as (217) 367-1126 or [email protected].

---

¹ 31 C.F.R. 1010.280(b)(1)(ii)

² 31 U.S.C. § 5336(b)(2)(A).

³ 31 U.S.C. § 5336.