The Corporate Transparency Act: Is Your Company Ready for the December 31, 2024 Filing Deadline? PDF Free Download
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The Corporate Transparency Act:
Is Your Company Ready for the
December 31, 2024 Filing Deadline?
by Daniel Hansen & Cathryn Gawne
Client Alert: September 2024
transparency in business ownership. The complete text of
the CTA and other reference materials can be found here:
(www.ncen.gov/boi/Reference-materials)
Although the CTA is now eecve, regulaons and advisory
interpretaons of the CTA are sll being developed and
issued, and several aspects of the law remain unresolved.
This Client Alert summarizes the CTA’s requirements as of
September 1, 2024.
Compliance Timing
Reporng Companies will have to report BOI depending on
when the company was formed:
◼ Reporng Companies formed before January 1, 2024,
have unl December 31, 2024 to comply with the CTA’s
reporng obligaons.
◼ Reporng Companies formed on or aer January 1,
2024, and before January 1, 2025, have 90 calendar
days from the Company’s date of formaon to le the
inial report and comply with the CTA.
◼ Reporng Companies formed on or aer January 1,
2025, will have 30 calendar days from their date of
formaon to comply with the CTA.
Reporng Companies
All domesc companies that are established through the
submission of a document to a Secretary of State or
comparable oce are impacted (which would include most
corporaons, LLCs, LLPs and LPs). A trust created by ling a
document with the Secretary of State, or similar oce, is
considered a Reporng Company and will need to submit a
The Corporate Transparency Act (“CTA”), a new federal
law aecng many new and exisng companies, went into
eect on January 1, 2024. The CTA requires certain com-
panies (“Reporng Companies”) to report benecial
ownership and other informaon to the US Treasury
Department’s Financial Crimes Enforcement Network
(“FinCEN”) through an e-ling system. The law also
includes ongoing reporng requirements and imposes civil
and criminal penales for non-compliance. More
informaon about the CTA and its requirements is set
forth below.
The CTA’s reporng requirements take eect for each
Reporng Company depending on when the Reporng
Company was formed. For Reporng Companies formed
before January 1, 2024, the CTA requires that such
companies comply with these reporng requirements on
or before December 31, 2024. The process of determin-
ing whether a company is a “Reporng Company,”
ascertaining the company’s “Benecial Owner(s)” and
obtaining the required informaon about such Benecial
Owner(s) to include in the ling may require substanal
lead me. We strongly recommend that all companies
(including corporaons, LLCs, LPs and LLPs) formed before
January 1, 2024 start this process as soon as possible to
avoid last minute ling issues.
The Corporate Transparency Act
The CTA requires certain US companies, as well as foreign
companies registered to do business in any US state or
tribal jurisdicon, to report Benecial Ownership
Informaon (“BOI”) and other informaon to FinCEN. The
CTA was enacted to combat nancial crimes such as
money laundering and tax fraud by increasing
The informaon contained in this document is for general, informaonal purposes only, does not constute legal advice and should
not be relied upon as legal advice. For specic advice regarding this alert, please contact your team at M&H, LLP.
report. Most trusts do not require this ling in
connecon with their formaon and thus generally will
not fall under the denion of a Reporng Company. A
trust that is a Benecial Owner of a Reporng Company
may need to provide BOI to the Reporng Company to
include in the Reporng Company’s CTA report.
Addionally, all foreign companies that are registered to
do business in any US state or tribal jurisdicon are
impacted. Reporng obligaons apply to these enes
unless the enty is exempt.
The CTA provides 23 categories of exempt enes. The
primary exempons are:
◼ Operang companies that have (i) at least 20 full-
me employees in the US, (ii) an operang presence
at a physical oce in the US, and (iii) led a tax
return the previous year indicang more than $5
million in US-sourced gross receipts or sales.
◼ Issuers registered with the US Securies Exchange
Commission.
◼ Banks, bank holding companies, and credit unions.
◼ Registered investment companies, broker-dealers,
and registered venture capital fund advisors.
◼ Insurance companies or state-licensed insurance
producers.
◼ Accounng rms.
◼ Tax-exempt enes or certain enes that assist tax-
exempt enes. [Note that such enes should
monitor their tax-exempt status. If a tax-exempt
enty loses its tax-exempt status, such enty must
report BOI within 180 days.]
◼ Certain pooled investment vehicles.
◼ Inacve enes that (i) were in existence on or
before January 1, 2020, (ii) are not engaged in acve
business, (iii) are not owned, directly or indirectly, by
a foreign person, (iv) have not received or sent more
than $1,000 or experienced a change in ownership in the
immediately preceding 12 months, and (v) do not hold any
assets, including any ownership interests.
Note that even if a company is exempt from the CTA’s reporng
requirements, the company may own or substanally control
one or more non-exempt enes that are obligated to report.
The Small Enty Compliance Guide published by FinCEN includes
a checklist that may be helpful in determining whether a
company is exempt. The guide can be found here:
(www.ncen.gov/sites/default/les/shared/
BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf)
An exempt company does not have to le a CTA report if it has
always been exempt from the BOI reporng requirements.
However, if a company has previously led a report and later
becomes exempt, it should le an updated report indicang that
it is newly exempt. This updated report will only require a newly
exempt enty to (1) idenfy itself, and (2) check a box
conrming its newly exempt status1.
Required Reporng Informaon
Below is a summary of what the CTA requires a Reporng
Company to report to FinCEN:
Company Informaon:
◼ The company’s legal name, all trade names, and d/b/a
names;
◼ Street address of the company’s principal place of business
(which may not be a P.O. box or the address of a third
party);
◼ The jurisdicon in which the enty was formed;
◼ Tax ID number; and
◼ “Benecial owner” informaon.
Benecial Owner Informaon (for each Benecial Owner):
◼ Full legal name;
The informaon contained in this document is for general, informaonal purposes only, does not constute legal advice and should
not be relied upon as legal advice. For specic advice regarding this alert, please contact your team at M&H, LLP.
Corporate Transparency Act: December Deadline
September 2024
131 C.F.R. 1010.380(a)(2)(ii) and 31 C.F.R. 1010.380(b)(3)(ii)
◼ Date of birth;
◼ Current residenal address (which may not be a P.O.
box);
◼ An ID number, which should be from an acceptable
non-expired ID document such as (1) a US passport,
(2) a US driver’s license, or (3) an ID issued by a US
state, local, or tribal agency. Passports issued by for-
eign governments are only acceptable if an individual
does not have one of the three listed forms of ID; and
◼ An image of such ID.
Applicant Informaon:
Companies formed on or aer January 1, 2024, must
report the same benecial ownership informaon for
“company applicants” as well. “Company applicants” are
individuals who directly le the document that creates or
registers the Reporng Company with a Secretary of State
or similar oce. If more than one individual was involved,
the individual primarily responsible for direcng the ling
will also be considered a company applicant.
[Note: companies formed prior to January 1, 2024 do not
need to report company applicant informaon.]
Changes to Reported Informaon:
Reporng Companies are required to update their lings
with FinCEN if any required informaon changes or if any
mistakes are idened in previous reports within 30 days
of the change or discovery of inaccuracy.
If an inaccurate report is submied, the CTA provides
Reporng Companies with a safe harbor from penales if
a report correcng the inaccuracy is led within 90 days
of the deadline for the inial report.
Cercaon:
Under the CTA, a Reporng Company is required to
cerfy that the reported informaon is “true, correct, and
complete.”
Who is a Benecial Owner?
The main purpose of the CTA is to idenfy individuals who
ulmately own or control Reporng Companies. The CTA’s
idencaon process essenally requires a “look through” of all
owners of Reporng Companies that are enes themselves,
such as LLCs.
The CTA denes a Benecial Owner as an individual who:
◼ Either directly or indirectly, exercises “substanal control”
over the Reporng Company; or
◼ Owns or controls at least 25% of the “ownership interests”
of the Reporng Company.
The CTA further provides that “substanal control” is exercised
over a Reporng Company if an individual:
◼ Serves as a senior ocer (except for a corporate secretary
or treasurer);
◼ Has authority over the appointment or removal of any
senior ocer or a majority of the board of directors (or
similar body);
◼ Directs, determines, or has substanal inuence over
important decisions made by the Reporng Company; or
◼ Has any form of substanal control over the Reporng
Company, including a trustee of a trust.
“Ownership interests” are dened in the CTA to include all forms
of equity interests in the Reporng Company as well as capital or
prot interests, converble instruments, warrants or rights or
other opons or privileges to acquire equity, capital or other
interests in such Reporng Company. In addion:
◼ Any debt instrument is also deemed to be an “ownership
interest” to the extent it allows the holder to exercise the
same rights as one of the specied equity or other interests
in the denion of “ownership interests;”
◼ Outstanding interests (such as opons or prots) are
deemed to be exercised for purposes of the 25% ownership
test, and if there is more than one class of equity interests
outstanding, the 25% threshold is determined as a
percentage of all outstanding interests; and
The informaon contained in this document is for general, informaonal purposes only, does not constute legal advice and should
not be relied upon as legal advice. For specic advice regarding this alert, please contact your team at M&H, LLP.
Corporate Transparency Act: December Deadline
September 2024
to obtain a unique idenfying number from FinCEN which can
then be used for future CTA lings (rather than repeang the
benecial owner informaon). Individuals can obtain a FinCEN
idener by logging on to (hps://ncenid.ncen.gov/landing )
and providing their BOI. A Reporng Company will be able to get
a FinCEN idener only at or aer the me the Reporng
Company les its inial report. Note that if a Reporng Company
does not request a FinCEN idener when subming its inial
report, it will have to le another updated report to obtain one.
FinCEN idener holders must report any changes to their BOI
by ling an updated report no later than 30 days aer the date
on which the change occurred. If an inaccuracy is idened in
reported BOI, it must be corrected no later than 30 days aer an
individual becomes aware of the inaccuracy or has reason to
know of it. If an individual provides a FinCEN idener to a
Reporng Company, the burden to update the informaon
provided to FinCEN shis to the individual3.
Third Party Websites
Reporng Companies can ulize third-party services to le BOI
reports. Various established and new service providers are
oering to manage compliance with the CTA, including ling any
updated reports. If a Reporng Company ulizes a third-party
provider to le a BOI report, it should acquire a transcript of the
report and conrmaon of submission from the service provider.
Privacy
The CTA provides that informaon disclosed to FinCEN will not
be made public. However, the law also states that such
informaon can be disclosed (1) by request of a local, state,
tribe, or federal law enforcement agency (with the authorizaon
of a court of competent jurisdicon), (2) by a request made by a
federal agency on behalf of a foreign law enforcement agency,
or (3) by a request made by a nancial instuon with the cus-
tomer’s consent.
On December 21, 2023, FinCEN issued a nal rule on who can
access BOI. FinCEN will provide BOI access to federal, state, local
and tribal law enforcement agencies, nancial instuons with
customer due diligence requirements, and foreign governments.
◼ An individual may own or control an ownership
interest of a Reporng Company through a trust, or
other exempt enty, and therefore must provide BOI
to such Reporng Company for inclusion in the
Reporng Company’s BOI report.
The CTA excludes the following from the denion of a
benecial owner:
◼ Minor children (the child’s parent or guardian
informaon should be reported instead);
◼ An individual acng as a nominee, intermediary,
custodian, or agent on behalf of another individual
(but such underlying individual will sll be subject to
the BOI requirements);
◼ An individual acng solely as an employee (as long as
such individual is not a senior ocer of the
company);
◼ An individual whose interest in an enty is only
through a right of inheritance; and
◼ Creditors of the Reporng Company.
Penales for Non-Compliance
The CTA contains signicant penales for non-
compliance. Any person who willfully (i) fails to report
complete or updated BOI to FinCEN or (ii) provides, or
aempts to provide, false or fraudulent BOI in such
report, may face civil penales of up to $591 per day
(adjusted annually for inaon) for each day that the
violaon connues, or criminal penales including
imprisonment for up to two years and/or a ne of up to
$10,000. An individual may be held responsible for failure
to le a report if such individual (1) caused the failure to
report, or (2) was a senior ocer at the company at the
me of failure2.
FinCEN Ideners
In the interest of convenience, FinCEN allows individuals
The informaon contained in this document is for general, informaonal purposes only, does not constute legal advice and should
not be relied upon as legal advice. For specic advice regarding this alert, please contact your team at M&H, LLP.
Corporate Transparency Act: December Deadline
September 2024
231 U.S.C. 5336(h) and 31 C.F.R. 1010.380(g)(4)(iii)
331 C.F.R. 1010.380(b)(4)
Those who request BOI will have to le formal requests
and follow procedures outlined for each type of reques-
tor. For more informaon on which
agencies can access BOI informaon, condenality
requirements, and procedures they must follow, see the
rule on the retenon and disclosure of BOI by FinCEN in
31 USC. 5336(c).
More Informaon
Much of the reporng process and details are sll in ux,
such as rules governing access to BOI, details on how to
deacvate a FinCEN idener, and the development of an
Applicaon Programming Interface where reports can be
submied by third pares. We ancipate further
informaon and renements will be released by FinCEN
on an ongoing basis. Please contact your M&H aorney
for updated informaon.
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The informaon contained in this document is for general, informaonal purposes only, does not constute legal advice and should
not be relied upon as legal advice. For specic advice regarding this alert, please contact your team at M&H, LLP.
Corporate Transparency Act: December Deadline
September 2024
