What Is the Corporate Transparency Act?
The Corporate Transparency Act (“CTA”) is a new federal law that requires LLCs and corporations in Florida and other states to file certain personal information about the beneficial owners and senior officers or managers with the federal government. The CTA is administered through the Financial Crimes Enforcement Network (FinCEN)
The U.S. Congress enacted the Corporate Transparency Act of 2019 to combat financial crimes and money laundering by increasing transparency of the beneficial owners of small limited liability companies and corporations. As of January 1, 2024, Florida LLCs and other businesses must file personal information about the owners and managers. There are substantial civil and criminal penalties for non-compliance.
What Businesses Have to File CTA Reports?
All “Reporting Companies” must file a CTA report. A Reporting Company includes all LLCs, corporations, and other business entities formed or registered to do business in the United States by filing a formation document with the secretary of state or similar state offices. Large companies with more than 20 full-time employees, nonprofit entities, public companies, and other large businesses do not have to file CTA reports.
Trusts are not required to file, but if you are the trustee of a trust you must provide information about the trust beneficiaries if the trust is the Beneficial Owner of a Reporting Entity. For example, if you set up a trust that holds 25% or more of the membership interest in an LLC, the trust beneficiary information must be included in the LLC’s filing.
What Are the CTA Reporting Requirements?
Each Reporting Company must file beneficial owner information with the United States Financial Crimes Enforcement Network (“FinCen”). You can file reports electronically on the FinCEN website filing system.
Each report must provide the Reporting Company’s full name, any fictitious names, its street address (not P.O. box), its state of formation, and the business tax number. The report must also include personal information about the Reporting Company’s Beneficial Owners, including their full legal name, their date of birth, their complete residential address (P.O. boxes or mail-drop addresses are not compliant), and a copy (front and back) of a state-issued identification such as a driver’s license or passport.
Are You a Beneficial Owner Under the Corporate Transparency Act?
You are a Beneficial Owner of an LLC or other business if you directly or indirectly own at least 25 percent of the Reporting Company. Any form of current or future equity, such as an option, is considered ownership. Beneficial Owner also includes “Senior Officers” who exercise substantial control over the Reporting Company, including, for example, corporate officers and LLC managers.
What are the Deadlines for Filing FinCen Reports?
All Florida LLCs and other businesses formed before January 1, 2024 (that still exist) must file FinCEN reports about their Beneficial Owners and Senior Officers before January 1, 2025.
More importantly, beginning on January 1, 2024, all newly filed entities have 30 days after formation to disclose to FinCEN the required personal information about their Beneficial Owners and the person who filed the organizing documents. So, you would have to file personal information about an employee or agent who filed an LLC Articles of Organization with the Florida Secretary of State.
There are no annual reporting requirements. Each Reporting Entity has to file with FinCEN only once.
What If A Beneficial Owner or a Reporting Company Changes Their Address?
Any change in the information, such as an address change, initially provided to FinCEN must be reported by amendment within 30 days after the change. Address changes include changes in the Reporting Entity’s address or the residential address of a Beneficial Owner. Failure to amend a FinCEN report within 30 days is a violation subject to civil fines.
Are There Penalties For Non-Compliance With the ATA Filing Requirements?
Yes, there are civil and potential criminal penalties. The penalty for an inadvertent or negligent failure to file a FinCEN report within the reporting window is $500 per day with no maximum. Senior Officers of a Reporting Company may be criminally liable by willfully filing incorrect or incomplete company information. The criminal penalty is a $10,000 fine and up to two years imprisonment.
Will My Personal Information Included in a FinCEN Filing Be Public?
It’s not supposed to be public information. Your personal information submitted to FinCEN will not be publicly available online. The information may be disclosed to federal and state law enforcement in specified circumstances and to financial institutions with the Reporting Company’s prior consent.
Do You Have to Provide Personal Information and State Issued Documents for Every Reporting Company?
No. You may submit the required personal information and government issued identification once to FinCEN and obtain a personal FinCEN I.D. number.
Thereafter, you can provide Reporting Entities only your FiniCEN I.D. number to be included in the Reporting Company’s FinCEN report. Therefore, people who expect to file, or assist in the filing, of several LLCs over time should consider obtaining their personal FinCEN identification number.
Where Can I Get Detailed Information About CTA Reporting?
FinCEN provides information to the public on its website. You should contact an attorney or your CPA for detailed questions about your specific situation.
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